Bonds: Gilts little changed amid dovish Fed speak, ahead of French elections

Alexander Bueso Sharecast | 21 Apr, 2017 10:29 - Updated: 10:29 | | |

boe bank of england mpc city committee monetary policy

These were the movements in some of the most widely-followed 10-year sovereign bond yields:

US: 2.24% (+3bp)
UK: 1.07% (+0bp)
Germany: 0.24% (+4bp)
France: 0.93% (-2bp)
Spain: 1.70% (+2bp)
Italy: 2.27% (-1bp)
Portugal: 3.78% (-3bp)
Greece: 6.72% (+3bp)
Japan: 0.02% (+1bp)

Longer-term Gilts finished the Friday session little changed amid talk that Labour might be studying the possibility of tax hikes and following a speech by its leader, Jeremy Corbin, lambasting tax evaders and corruptness in the Conservative party.

Acting as a backdrop, US Treasury Secretary Steve Mnuchin said he expected the White House to be able to push through its tax reform plans before the end of year, with the resulting boost to risk appetite in financial markets pushing yields higher.

In parallel, in remarks to Bloomberg TV Dallas Fed president Robert Kaplan said a total of three interest rate hikes by the central bank in 2017 was still a reasonable base assumption.

"If the economy develops a little more slowly, we can do less than that. If the economy is a little stronger, we can do more than that."

Key to Kaplan's thinking, the so-called neutral rate for interest rates in the US is lower than some observers believe, lying "closer to 2% than to 3%".

He also commented on the current level of the yield on the benchmark 10-year US Treasury note saying it reflected "the fact that expected GDP growth is going to be maybe sluggish as it has been the last several years."

Political events in Europe or other geopolitical tensions might also influence, he said.

On a related note, French 10-year bonds advanced on Thursday, helping to narrow the yield spread over bunds.

However, some observers in the market believed that was the result of safe-haven buying ahead of the first round of voting in the country's presidential elections on Sunday.

More news

12:02 7digital confident in 2018 profitability

Digital music and radio services company 7digital performed well in the first half of the year, it reported on Friday, with total group revenue up 13% to £5.93m.

12:01 London midday: Stocks extend losses as Barclays, IAG reverse course

London stocks had pushed further into the red by midday following a series of disappointing corporate releases, at the end of what has been a manic week for earnings.

11:52 Gfinity 'Elite Series' to feature on BBC Three

International esports company Gfinity signed a contract with the British Broadcasting Corporation, it announced on Thursday, to broadcast its newly launched Elite Series from the Gfinity Arena in London.

11:46 Amazon profits slump as retail giant spends big

US ecommerce colossus Amazon has recorded a 77% drop in quarterly income as it spends heavily in order to boost growth.

11:38 Virtual IBANs push Boxhill in first half

Boxhill Technologies said it had seen improvements across the payments division since the beginning of the year, in a trading update on Friday, both in revenue and technology roll out.

11:23 Analysts have mixed feelings on Barclays 'messy' results

On the face of it, Barclays' first-half results beat City consensus forecasts but analysts had mixed feelings after digging deeper into the numbers.

11:22 Barclays slips to second quarter loss after GBP700m PPI charge

Barclays produced a mixed set of interim with some profits better and some worse than expected due in part to putting aside an extra £700m for PPI mis-selling compensation, while its pensions black hole more than doubled.

11:17 MySQUAR confirms fundraise as it looks to mobile payments

Myanmar-language social media, entertainment and payments platform MySQUAR was forced to respond to recent media speculation over a potential fundraise on Friday, confirming that a placing was in the process of being arranged.

11:13 Touchstone Exploration bags gongs at Petrotrin awards

Trinidad and Tobago-focussed onshore oil and gas exploration and production company Touchstone Exploration received two awards at the Petrotrin 5th Annual Production Health, Safety and Environment Leadership Forum, the company announced on Friday.

11:05 Asia report: Most markets lower amid cyclone of earnings

Markets in Asia were mostly lower on Friday, with traders sifting through a decent pile of corporate earnings.