Bonds: Fed's Yellen sounds dovish note
The movements in the most widely followed long-term sovereign bond yields was:
US: 1.96% (-4bp)
UK: 1.54% (-4bp)
Germany: 0.21% (-1bp)
France: 0.51% (+2bp)
Italy: 1.34% (+4bp)
Spain: 1.32% (+7bp)
Portugal: 1.78% (+0bp)
Greece: 11.06% (-1bp)
Japan: 0.34% (-4bp)
Sovereign bond yields were lower on the other side of the Pond on Friday, as traders honed in on the latest estimates for fourth quarter GDP Stateside and a speech from Fed chair Janet Yellen.
Revised figures from the US Bureau of Economic Analysis confirmed the US economy expanded at an annualised pace of 2.2% in the final three months of 2014. That was two tenth of a percentage point lower than economists had penciled in.
The rate of growth in household consumption was revised higher to show a rise 4.4%, as the drop in oil prices provided a windfall for consumers. Nonetheless, that too was also less than anticipated by analysts.
Speaking at a conference hosted by the San Francisco Fed, Chair Janet Yellen struck a highly dovish tone, similar to that of Fed Vice-Chairman Stanley Fischer earlier in the week.
Yellen said: "The actual path of policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause, or even reverse course depending on actual and expected developments in real activity and inflation.”
Economic agents should be wary of assuming the central bank will follow the classic step-stair pattern of interest rate hikes in a mechanistic fashion, Yellen explained as she revealed the existence of "special risks".
Acting as a backdrop, also on Friday authorities in Greece handed in their list of economic reform measures which international creditors had required of Athens. These were to be analysed and negotiated upon throughtout the weekend.
The Mediterranean country was facing approximately €1bn in payments falling due in April. Of those, €450m were payments to the International Monetary Fund.
Athens was likely to finally reach an agreement with its creditors which would give it access to the funds to meet that deadline and avoid defaulting on its debt, ratings agency Fitch said after the close of trading on Friday.
However, the strained funding conditions faced by the government had likely already de-railed prospects for the tepid economic recovery which had been underway, as the government's rationing of funding 'crowded-out' the private sector, Fitch explained.
As a result Fitch, lowered its view on Greece's long-term issuer rating to CCC while slashing its forecast for gross domestic product growth in 2015 to just 0.4% from 1.5% previously.
Lastly, both Bank of England Governor Mark Carney and fellow Monetary Policy Committe member Ben Broadbent were quoted on Friday as saying that interest rate increases were likeliest outcome over coming years.
"We're still in a position where our message is... that the next move in interest rates is going to be up," Carney said at a Bundesbank conference in Frankfurt.