U.S. Treasury bonds sold off as investors bet on a Donald Trump administration boosting fiscal spending, President Trump has promised a big boost in spending on defense and infrastructure and also pledging to cut taxes steeply. That will likely increase the supply of bonds and so put pressure on prices. The yield on the benchmark 10-year U.S treasury rose by 20 bps post Trump victory to levels of 2.02%%. Fed is also most likely to stay on course for rate hikes in December post the positive October jobs data that saw wage growth rising at the fastest pace since 2009.
Japanese 10-year benchmark bond yields fell by 2 bps on weekly basis though rising after the sell off in US treasuries. Germany bond yields were highly volatile throughout the week, bond yields edged higher ahead of the U.S. presidential election on expectations that Democrat Hillary Clinton would win, after presidential election result German government bond yields bounced off two-week lows as the initial shock of Republican Donald Trump’s victory in the U.S. Germany 10-year benchmark bond yields rose by 3 bps on weekly basis. U.K 10-year benchmark bond yields rose by 7 bps.
Italy bond yields rose by 9 bps; Italian government bond yields rose sharply on speculation that Rome could delay its constitutional referendum scheduled for December 4, Interior Minister Angelino Alfano said he would be in favour of postponing the constitutional referendum if the opposition asked for a delay. Portugal bond yields were flat after the Socialist government won approval for the 2017 budget with support from two far-left allies, The budget aims to slash the budget deficit to 1.6 percent of GDP from 2.4 percent this year, Greece 10-year benchmark bond yield fell by 60 bps after Greece’s prime minister, Alexis Tsipras, raised the prospect that Greek government bonds could be included in the European Central Bank’s bond-buying programme early next year. Spain bond yields rose by 5 bps
Emerging economies 10-year benchmark bond yields were mixed last week. Brazil benchmark bond yields fell by 25 bps, Russian bond yields fell by 21 bps on speculation U.S. President-elect Donald Trump will improve ties with Moscow, leading to an end to sanctions that have stalled an economic recovery, Chinese bond yields rose by 2 bps. South African bond yields rose by 12bps, Indian bond yields fell by 15 bps as Indian Government banned Rs 500 and Rs 1000 currency note and Indonesia bond yields rose by 14 bps.
US high yield bond yields rose 23 bps and Eurozone high yield bond yields rose 08 bps last week respectively.
Benchmark US High Yield corporate Bond Yields %
Benchmark Euro High Yield corporate Bond Yields %
