Bonds: Italian bonds rally as Fitch shies from downgrading sovereign

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

US: 2.67% (+2bp)

UK: 1.18% (+2bp)

Germany: 0.11% (+1bp)

France: 0.52% (+1bp)

Spain: 1.16% (-1bp)

Italy: 2.77% (-7bp)

Portugal: 1.47% (-2bp)

Greece: 3.78% (-3bp)

Japan: -0.04% (+0bp)

The market spotlight was firmly on Rome at the start of the week, following Fitch's decision to keep the country's long-term debt at so-called 'investment grade'.

After the close of markets on Friday, the agency reaffirmed its BBB rating on Italian debt. And while that action came with a 'negative outlook', some analysts were nevertheless "somewhat surprised" by the absence of a downgrade.

Meanwhile, citing the progress made in trade talks with China as the reason, on Sunday the US President had announced the postponement of the fresh American tariffs which had been set to go into effect on 2 March.

Donald Trump also opened the door to a possible meeting with his opposite number in China, Xi Jinping, in order to finalise any deal.

No specific date was mentioned, but in any case some analysts cautioned that the underlying tension between the two countries was set to continue.

As well, there was the no small matter of Trump needing to appease the trade hawks in the US Senate, while China's next National People's Congress was due to kick-off on 5 March.

In the background, in a research note sent to clients on Monday, equity strategists at JP Morgan said the market should begin to price in that the Federal Reserve will fall behind the curve, which should seen 10-year Treasury yields rise and the interest rate curve steepen.