Bonds: Aggressive Fed speak weighs on bonds

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

US: 1.9173% (+4bp)
UK: 1.477% (+3bp)
Germany: 0.229% (+2bp)
France: 0.57% (+1bp)
Spain: 1.44% (+1bp)
Italy: 1.26% (-1bp)
Japan: -0.09% (+0bp)
Greece: 8.67% (+6bp)
Portugal: 2.93% (+1bp)

Relatively hawkish Fed speak weighed on 'core' longer-term sovereign bonds amid holiday-thinned trading conditions on Monday.

Speaking in the afternoon, the president of the US Federal Reserve bank of Atlanta, Dennis Lockhart, said another interest rate hike might be on the cards at one of the next meetings "possibly as early as the meeting scheduled for end of April," Market News International reported.

His remarks echoed those of San Francisco Fed president John Williams, on Friday, in an interview with MNI.

"All else equal, assuming everything else is basically the same and the data flow continues the way I hope and expect, then April or June would definitely be potential times to have an increase in interest rates," Williams reportedly said.

Speaking at a central banking conference in Paris, earlier on Monday, the president of the Federal Reserve bank of Richmond, Jeffrey Lacker, reportedly said that upside risks to price stability had increased, perhaps "not significantly" but "I think noticeably and I think materially".

"We need to take that into consideration," Lacker added.

In the background, the debate into the 'pros' and 'cons' of Brexit continued.

Leaving the European Union could cost the UK economy up to £100bn and around 950,000 jobs, according to a report from PwC commissioned by the Confederation of British Industry and published at the start of the week.

Policymakers´ remarks on the other side of the Channel meanwhile were rather 'dovish', with ECB governing council member Erkki Liikanen telling an audience that the monetary authority was not out of tools to prop up growth, including the possibility of further cuts to interest rates.

"The monetary policy measures and forward guidance [announced by the ECB on 10 March] together constitute a comprehensive response. The new measures will accelerate the return of inflation to levels below but close to 2%, and support the recovery of the euro area economy," Liikanen said.