Bonds: Odds of March Fed hike jump and then fall back
These were the movements in some of the most widely-followed 10-year sovereign bond yields:
US: 2.39% (+2bp)
UK: 1.15% (+0bp)
Germany: 0.21% (+1bp)
France: 0.93% (+4bp)
Spain: 1.66% (+0bp)
Italy: 0.89% (+1bp)
Portugal: 3.88% (+0bp)
Greece: 7.15% (+1bp)
Japan: 0.06% (+0bp)
Calm trading in longer-term developed world sovereign debt masked sharp movements on the shorter end of the curve, especially in the States, amid a cacophony of Fedspeakers, alonsgide renewed promises of greater infrastructure and defence spend from president Donald Trump.
No less than four regional Fed presidents left the door open to another 25 basis point interest rate hike at the US central bank's 14 to 15 March meeting.
Perhaps the clearest remarks on the subject came from San Francisco Fed chief John Williams, who said that possibility would receive "serious consideration" at the Federal Open Market Committee's next meeting.
Combined, their remarks (with Trump in the background) pushed the yield on the policy-sensitive benchmark two-year US government bond up by seven basis points to 1.26%.
In parallel, at one point in the afternoon Fed funds futures moved to price-in greater than 70% odds of a March hike, versus about 50% before they spoke.
The market implied odds of a march hike fell back to 50% later in the session, with some market commentary referencing traders sitting on their hands ahead of a speech by Fed chair Janet Yellen herself scheduled for 3 March.
However, come Wednesday morning one trader indicated they were again headed higher, although according to the CME's Fed Watch tool as of 1139 GMT the implied odds stood at 35.4%, up by just a smidgen from the prior session's level of 31.0%.