Bonds: Treasuries finish on mixed note, Fitch lowers outlook for Italy
These were the movements in the most widely-followed 10-year sovereign bond yields:
US: 2.86% (+1bp)
UK: 1.43% (-3bp)
Germany: 0.33% (-2bp)
France: 0.68% (-1bp)
Spain: 1.47% (+0bp)
Italy: 3.24% (+2bp)
Portugal: 1.92% (+0bp)
Greece: 4.40% (3bp)
Japan: 0.11% (-0bp)
US Treasuries finished the Friday session on a mixed note, with the longer-end of the curve coming under slight selling pressure on the back of stronger-than-expected readings on consumer confidence and for MNI's Chicago Purchasing Managers' Index.
The short-end of the curve on the other hand benefited from expectations for less supply of Treasuries in September, although they were expected to increase thereafter.
On 4 September, the Treasury was expected to tap markets for $145.0bn, which would be down from $161.0bn during the previous week.
Against that backdrop, the yield on the benchmark two-year US Treasury slipped by two basis points to 2.63%, even as the yield on the 10-year note rose by one basis point.
The University of Michigan revised its August consumer confidence index from 95.3 to 96.2 (consensus: 95.7), although as Barclays Research noted, that remained its weakest reading year-to-date.
"That said, consumers remain optimistic about future economic conditions, underpinned by their outlook on job security and future income prospects," said Barclays's Pooja Sriram.
"[...] In addition, the expectation that the nation will have good times ahead held broadly steady in August. In all, higher after-tax incomes, a strong labour market, and above-trend economic growth continue to anchor sentiment."
To take note of, subindices for inflation expectations contained in the University of Michigan survey were revised slightly higher as well.
In the euro area periphery meanwhile, all eyes were on Fitch Ratings's review of Italy's sovereign credit rating.
Fitch did not downgrade the country's long-term debt rating, keeping at BBB instead, but did revise the so-called outlook from 'stable' to 'negative', heralding a possible cut in the not too distant future.
According to Fitch, "The risk of a reversal of structural reforms negatively impacting Italy’s credit fundamentals has increased somewhat, in our view [...]
"Fiscal and other policy risks are compounded by the relatively high degree of political uncertainty."