Bond yields in Northern Europe was Friday sent up by surprisingly good U.S. job figures, which were as expected in September but contained upward revisions of the previous two months' figures. It sent investors to back the tables to turn up the knob that controls the "risk-on". This gave rise in stock markets, rising interest rates in the safe countries and declining yields in riskier countries from southern Europe.
In southern Europe, the reaction was the opposite. The ten-year interest rates in Portugal fell 44 basis points to 8.02 percent, while the Spanish sat more modest 21 basis points to around 5.65 percent, and Italian yields fell by 8 basis points to around 5.03 per cent.
The U.S. benchmark bond - the ten-year T-bond - which is also considered as a safe haven, fell in price from about 99 16/32 to just over 99, which corresponded to an increase in interest rates from 1.68 percent to 1.73 percent. But at market close in Europe it had re-adjusted again to just under 99 8/32 equivalent to an interest rate of 1.71 percent.
The U.S. employment report - the King of ratios - for September contained some nice upward revisions of the previous two months' figures. Overall, the number of non-agricultural employment was revised up by 86,000 in July and August.
In September non-farm employment increased with 114,000, which was in line with analysts' expectations, which according to Bloomberg News was 115,000. The figure for August was revised to an increase of 142,000 from the previously reported 96,000, and in July it was raised to 181,000 from the previously reported 141,000.
The U.S. employment report also showed that the unemployment rate surprisingly fell to 7.8 percent - the lowest unemployment since Obama entered the White House in January 2009 - from 8.1 percent. Economists had expected a rise in unemployment to 8.2 percent. The unemployment rate fell as a result of both increased labor force and employment growth.
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