Bonds: Gilts dip, Italian debt rallies (again)
These were the movements in some of the most widely-followed 10-year sovereign note yields:
US: 2.99% (-0bp)
UK: 1.54% (+1bp)
Germany: 0.46% (+1bp)
France: 0.77% (+1bp)
Spain: 1.49% (+0bp)
Italy: 2.85% (-14bp)
Portugal: 1.83% (-3bp)
Greece: 4.04% (-6bp)
Japan: 0.12% (closed)
Longer-term Gilts finished slightly lower on Monday as the pound rallied on what some analysts described as "flickerings" of optimism that London and Brussels will be able to reach a Brexit deal.
Linked to the above, and ahead of Thursday's meeting of European Union leaders, in Salzburg, at the weekend German Chancellor Angela Merkel and Austria's Sebastian Kurz said that everything needed to be done in order to avoid the UK crashing out of the bloc without a trade deal.
Nevertheless, overnight most sovereign debt had in fact found a bid, which by mid-session had evaporated, and reports that the White House was intent on pushing ahead with fresh tariffs on Chinese goods may have triggered some haven flows towards the end of trading.
In any case, the biggest moves were again to be seen in Italian debt, amid reports that the Italian government would stick to a "prudent" approach when it came to deciding on its budget proposals for 2019.
There was also some talk in markets of big fund managers buying Italian debt in the belief that markets were being excessively pessimistic.
Helping Portuguese debt, after the close of markets on Friday, Standard&Poor's raised the outlook on the country's long-term debt rating from 'stable' to 'positive'.
To take note of too, on Monday analysts at Bank of America-Merrill Lynch cut their forecasts for euro area GDP growth in 2018 and 2019 by two tenths of a percentage point to 1.9% and 1.5%, respectively, versus a consensus view of 2.1% and 1.8%.
"The ECB is forecasting core inflation above 1.6% for next summer (BofA-ML's forecast was for core CPI to be 1.3% in 2019). We always doubted core inflation can get so far by that time, and it looks increasingly challenging," BofA-ML said.
"But the bar for the normalisation of the deposit rate to zero is not very high and at this point our call remains unchanged, with 20bp in September 2019."