Bonds: Sovereign bond yields little changed after slate of GDP data
Sovereign bond yields were little changed as the market digested economic growth reports out of Greece, Switzerland and the US.
US: 2.11% (-3bp)
UK: 1.81% (-1bp)
Germany: 0.51% (-2bp)
France: 0.83% (-1bp)
Spain: 1.84% (+1bp)
Italy: 1.86% (-1bp)
Greece: 11.18% (+5bp)
Portugal: 2.57% (+3bp)
Japan: 0.39% (-1bp)
Investors were likely also taking up positions ahead of the monthly jobs report Stateside, next Friday, which might play a decisive role in shaping investors' expectations of when the Fed will deliver its first interest rate increase, in September - as most now expect - in December, or perhaps even in 2016.
Greek 10-year yields rose after data showing gross domestic product (GDP) fell 2% in the first three months of the year when compared with the last quarter, confirming a preliminary estimate released earlier this month. The latest contraction follows a 0.4% decline in the fourth quarter of 2014.
The report came as EU-policymakers warned that a deal to unlock further aid to Greece was yet to be made during the G-7 on Friday.
Greek finance minister Yanis Varoufakis said the country was looking for a comprehensive agreement with its international creditors that should include debt relief.
In parallel, economics minister, Giorgios Stathakis, said Athens will be able to repay the first tranche of its loans to the IMF on 5 June.
In Germany, yields were lower despite the release of ECB data for April showing a further pick-up in bank lending to the private sector.
Chancellor Angela Merkel said she would work constructively with British Prime Minister David Cameron on reforming the EU.
US 10-year Treasury yields ended lower as GDP fell at an annualised pace 0.7% in the in the first three months of 2015, worse than a preliminary estimate for an increase of 0.2% but ahead of economists' forecasts for a contraction of 1%.
Elsewhere in the US, Morgan Stanley said the Federal Reserve’s resolve to tighten policy even in the face of weaker current activity has only strengthened.
The analysts said the first rate increase will not arrive until December, followed by another in March.
“Evidenced by low volumes in fixed income markets, investors have hunkered down, awaiting stronger incoming data that confirms the Fed's belief, and our own, that the economy will return to above-trend growth in the second half of the year,” analyst Ellen Zentner wrote in a note on Thursday.
Meanwhile, Swiss GDP in the three months through March fell 0.2% from the previous quarter and was 1.1% higher on the year, the Federal Department of Economic Affairs, Education and Research said. It was lower than economists' expectations for a quarterly contraction of 0.1% and annual expansion of 1.6%.
In Japan, the 10-year yield was slightly lower as a report showed households’ consumption fell by 1.3% from a year earlier in April, a far worse outcome than the growth of 3.4% which economists had been projecting.
The unemployment rate slipped in April by one tenth of a percentage point to reach 3.3%. However, that was partly a reflection of a shrinking workforce after 340,000 people left the jobs market.