Bonds: 10-year US Tsy auction sees solid demand, BTPs see volatility
These were the movements in some of the most widely-followed 10-year sovereign bond yields:
US: 2.97% (-1bp)
UK: 1.31% (-1bp)
Germany: 0.40% (-1bp)
France: 0.73% (+0bp)
Spain: 1.41% (+1bp)
Italy: 2.91% (+4bp)
Portugal: 1.77% (+2bp)
Greece: 4.0% (+0bp)
Japan: 0.11% (-0bp)
Sovereign bond markets were for the most part becalmed on Wednesday, with a record-sized sale of longer-term US Treasuries being met with solid demand.
A US Treasury auction of $26.0bn of 10-year notes fetched a bid-to-cover ratio of 2.546, with the proportion of indirect bids standing at 32% of the total.
In the background, Richmond Fed chief, Thomas Barkin, reiterated multiple times in a speech that US economic growth was "strong", adding that he would be focusing on measures of labour market churn for a signal that wage pressures might be set to pick-up.
Nevertheless, the pace and extent of interest rate hikes would be data-dependent, he said. Indeed, he conceded that rate-setters did not know how far or fast rates would need to be tightened.
Meantime, in Europe, Italian 10-year bonds fell back only moderately but traded within quite a wide range, which at one point saw BTP yields fall to 2.81%.
In an interview with Il Sole 24 Ore, the country's finance minister, Giovanni Tria, moved to assuage concerns that discussions for the government's 2019 budget might put Italy's debt reduction commitments at risk.
Tria said Rome was discussing with the European Commission how to avoid a correction that might slow down the economy and left the door open to privatisations to help finance his government's spending plans.
According to Tria, Italy's gross domestic product would expand at a pace of 1.2% in 2018, down from a previous projection for growth of 1.5%, and by between 1.0% and 1.1% in 2019.