Bonds: Russian and Turkish bond yields jump after fighter shot down
These were the movements in the most widely followed 10-year sovereign bond yields:
US: 2.26% (-1bp)
UK: 1.88% (-1bp)
France: 0.87% (+1bp)
Germany: 0.55% (+1bp)
Italy: 1.52% (+3bp)
Spain: 1.64% (-1bp)
Portugal: 2.53% (+0bp)
Japan: 0.32% (+0bp)
Sovereign bonds diverged again on Tuesday, with revisions to estimates for US gross domestic product and dovish remarks from the Bank of England´s chief economist weighing on yields in the UK and US.
However, it was Russian and Turkish government debt that caught investors´ attention following the shooting down of a Russian fighter jet after it tresspassed on Turkish airspace. Turkish 10-year yields jumped 25 basis points to 10.20% while those on similarly-dated Russian debt rose 18 basis points to 9.75%.
US gross domestic product grew at an annualised pace of 2.1% in the third quarter, a tenth of a percentage more than economists had expected, according to revised data from the Department of Commerce.
Meanhwile, in testimony to the Treasury Select Committee on Tuesday morning, the BoE´s Andrew Haldane warned that in light of headwinds from the slowdown in the emerging markets interest rates could be lowered.
“In my view, policy needs to be poised to move in either direction in the period ahead, depending on how the data and risks, domestic and international, play out,” he said.
“When rates do rise, I expect any rises to be both gradual and limited, in line with the Committee’s guidance.”
"Altogether, the revisions to Q3 GDP came in as expected and do little to change the picture of solid domestic demand offset by weakness in trade and manufacturing [...] the second estimate of Q3 GDP suggests that we may see a further slowdown in private inventory accumulation in Q4 and we will look to the incoming data to assess this trend," Barclays said in reaction to the US data.
Quite unexpectedly, the University of Michigan´s consumer confidence gauge weakened in November to reach a reading of 90.4, much lower than October´s upwardly revised reading of 99.1 (consensus: 99.5).