European bond markets tried to hold on to the previous day's gains until around 11:30 a.m., but by lunchtime heaviness had taken over, and yields came under further pressure in the afternoon, despite disappointing US figures published at 2:30 p.m., which cooled traders a little further.
The Bund is at 2.412% (+6pts), our OATs are down +5.5pts to 2.888%, and Italian BTPs are down +2.5pts to 3.88%.
Over the past week, Bunds have seen their yields rise by 3pts. This is less severe than for T-Bonds, which are up +14pts on the weekly, with a spread of +7.5pts this Friday to 4.315%.

Investors reacted badly to the figures for US producer prices (or PPI), a component of the PCE index (the Fed's preferred measure of inflation).
PPI rose by 0.9% year-on-year in January in the US, whereas it was expected to rise by 0.6% (versus +1% in December). On a monthly basis, producer prices rose by 0.3%, against an expected increase of 0.1%.
Excluding food and energy, they were up by 0.6% on a monthly basis, compared with a consensus of +0.1% and +0.2% in December.

Building permits also disappointed, falling by -1.5% on an annual basis to 1,470 million in the US.
And it got worse with housing starts, which fell by -14.8% to 1.331 million, after 1.562 million in December (vs. 1.450 expected).

Building permits and housing starts continued to be penalized by high interest rates, and this is not going to improve in February as mortgage rates rise sharply in the wake of Tuesday's CPI figures, with hopes of a Fed rate cut pushed back to June.

U.S. consumer confidence improved slightly this month, according to the University of Michigan's preliminary estimate of 79.6, compared with 79 the previous month.

"Consumers continued to express confidence that inflation will continue to slow and that labor markets will remain strong", explains Joanne Hsu, Director of Consumer Surveys.

Across the Channel, the week ended badly, with Gilts up +8.5 basis points at 4.132%.

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