Bonds: Yields back up as investors take positions ahead of ECB
The following were the yield and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:
US: 2.41% (+7bp)
UK: 2.44% (+6bp)
Germany: 0.93% (+5bp)
France: 1.32% (+6bp)
Spain: 2.27% (+2bp)
Italy: 2.46% (+3bp)
Japan: 0.51% (+1bp)
Portugal: 3.25% (+6bp)
Greece: 5.84% (+10bp)
Sovereign bond yields in the US were higher across the board come Tuesday in the wake of stronger than expected manufacturing data Stateside, which seems to have buttressed traders' views regarding the strength of the economic recovery.
The pace of expansion in the US manufacturing sector picked up in August to its fastest rate in three years, according to a widely-followed report published on Tuesday.
The Institute for Supply Management's (ISM) US manufacturing index increased to 59.0 last month, up from 51.7 in July.
That was the highest reading since March 2011 and came in ahead of the consensus forecast of 57.0.
In parallel, on Tuesday evening economists at Unicredit Research lowered their forecasts for Eurozone gross domestic product growth this year and next to 0.8% and 1.2%, from 1.2% and 1.7%, respectively.
This came as investors took position ahead of the 4 September European Central bank policy meeting.
On the geopolitical front, Russia's foreign minister Sergei Lavrov accused Ukraine's allies of stoking the five-month conflict just as his Security Council Deputy Secretary, Mikhail Popov, announced that Russia will revise its military doctrine in order to counter new threats.
In parallel, Ukrainian government forces had adopted a defensive stance in the face of a Russian onslaught.
Lastly, by some estimates corporate debt issuance in American markets is expected to reach $100bn in September, which may have pressured the fixed income space.
AB