Bonds: Global hunt for yield continues, US treasuries wanted

These were the biggest movements in the most widely-followed longer-term sovereign bond yields:

US: 1.83% (-4bp)

UK: 1.42% (-4bp)

Germany: 0.15% (-1bp)

France: 0.48% (+1bp)

Spain: 1.50% (+3bp)

Italy: 0.48% (+1bp)

Portugal: 3.02% (+7bp)

Greece: 7.20% (+7bp)

Japan: -0.12% (-4bp)

Ten-year sovereign bonds for the world´s largest economies jumped against a backdrop of somewhat downbeat remarks from policy-makers around the world and ever so slighly less hawkish remarks from two top US central bank officials.

Notably, the Eurozone periphery, and even France, which is facing the prospect of nation-wide industrial action against recently-approved labour market reforms, did not join in the rally.

However, according to some analysts, referencing market commentary, the main driver of Thursday´s price action was the continuing hunt for yield among global investors.

An afternoon auction of seven-year US Treasury debt was met with such strong demand that primray traders were left holding a near record-low allocation of just 19% of the bonds on offer.

Indeed, in a research note published on Friday but dated 26 May, BofA-Merrill Lynch strategists Michael Hartnett and Brian Leung described the latest weekly flow data between asset classes as "unambiguosly risk-off", with bonds attracting $2.6bn-worth of inflows and money-market instriments another $12.2bn.

In another research note released that same day, those same two BofA strategists pointed out to clients: "Helicopters: BoJ in Japan, Riksbank in Sweden, SNB in Switzerland hint at future use of "helicopter money"."

Speaking from Singapore, St.Louis Fed president James Bullard said he preferred not to pre-judge the course of action that he and his peers on the Federal Open Market Committee, the US central bank´s rate-setting body, would embark upon when they met to decide on policy on 15 June.

"I'm keeping an open mind, I want to look at the data as it's available at the meeting," Bullard reportedly said.

In a largely similar tone, later in the day US Fed governor Jerome Powell said another rate increase "may be appropriate fairly soon" if incoming data confirmed America´s economy was rebounding strongly from the weakness that was apparent over the previous two quarters.

However, Powell also cited multiple risk factors which needed to be monitored.

To take note of, on Friday morning Steven Major, Managing Director for Fixed Income Research at HSBC, told Bloomberg TV US two-year Treasuries at a yield of about 0.90% were not particularly rich.

In his opinion, if the US Federal Reserve hiked interest rates once or twice in 2016 - and then stopped - that would see yields on debt of that maturity fall back towards around 0.60%.

That, in turn, might steepen the US government debt interest rate curve, Major said.