Bonds: Yields back-up ahead of Fed's Powell
Updated : 12:06
These were the biggest movements in the most widely-followed 10-year sovereign bond yields:
US: 2.06% (+1bp)
UK: 0.72% (+0bp)
Germany: -0.35% (+2bp)
France: -0.05% (+2bp)
Spain: 0.42% (-2bp)
Italy: 1.73% (-6bp)
Greece: 2.20% (+10bp)
Japan: -0.14% (+1bp)
Longer-dated Gilts finished the Tuesday session little changed, as weakness in the pound helped put a lid on UK yields, in what was mostly a risk-off session as traders waited on a key speech from US central bank chief Jerome Powell scheduled for the following day.
Most economists' forecasts for rates in the US - but not all - appeared to be in agreement with then current pricing in Fed funds futures for a 25 basis point reduction in the target range for short-term official interest rates.
But in the wake of the stronger than expected June jobs report published on 5 July, some economists had grown unsure about whether the Fed would then follow-up with just one or two more interest rate cuts.
And price gauges contained in the National Federation of Independent Businesses's small company optimism index published on Tuesday were consistent with core CPI inflation in the States running at a year-on-year rate of roughly 2.7% by late spring 2020, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Against that backdrop, strategists at Credit Suisse wrote in a research report sent to clients that they saw "a clear risk" that 10-year Bund yields would rise back to 0% and that those on similarly-dated Treasuries would hit 2.4% on a six to 12-month view.
They also noted how two-year US Treasury yields had been just a far below the Fed funds rate four months prior to the onset of the 2001 recession and 12 months before the global financial crisis kicked-off.
In the case of Europe meanwhile, the Swiss broker said the gap between inflation expectations and wage growth - which drove 70% of inflation - was at a record high and Bund yields were discounting further declines in PMI new orders - but they disagreed.