Bonds: Bulls seem unstoppable



LONDON (ShareCast) - Here are the yield and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:

United States 2.02% +1bp
Germany 1.71% +3bp
Britain 2.12% +3bp
France 2.30% +4bp
Italy 4.21% +4bp
Spain 5.16% 0bp

There was little sense of 'risk on' after US fourth quarter GDP figures disappointed.

The only blip was Spain where yields were unchanged after enthusiasm for equities was tempered by a bigger-than-expected fall in fourth quarter GDP.

Stateside, economists had predicted GDP growth to the tune of around 1.1% but the number came in at -0.1% as huge defence cuts began to bite.

It was the first fall in US GDP in three-and-a-half years - the last drop was in the second quarter of 2009 when the country was in recession.

The latest figures showed government spending fell 6.6% in the fourth quarter, while companies cut back on inventories to the tune of 1.3%.

Trade also held the economy back, as exports fell 5.7% during the quarter.

One market commentator remarked that "the bulls are immortal".

However, another said the headline figure was misleading and the US economy was in better shape than it suggested.

In fact, Peter Newland at Barclays (LSE: BARC.L - news) pointed out the tone of the report was positive when inventories and defence were excluded.

Private consumption growth picked up to 2.2% in Q4 from 1.6% in Q3.

Fixed investment saw growth jump from 0.9% to to 9.7% , reflecting gains in equipment and software (12.4%) and residential (15.3%), which more than offset a small decline in structures (-1.1%).

The ongoing bullish tone was supported by separate figures which showed a healthy rise in employment in the US.

Private-sector jobs in the country increased by 192,000 in January, according to a national employment report calculated by payroll processor Automatic Data Processing (NasdaqGS: ADP - news) .

Forecasters had predicted that the number was more likely to come in around 165,000.