Geopolitical tensions are easing somewhat in the hope that a diplomatic solution will avert an escalation between Israel and Iran, diverting capital from safe-haven investments such as Treasuries... but the deterioration in bond markets has been amplified by US retail sales figures that came in above expectations.
The US '10-yr' has rocketed by almost +15pts to 4.642%... and the '2-yr' has just flirted with 5.000% (4.999%).

The contagion has spread to our OATs, which have tightened by +9.5pts to 2.9540%, Bunds by +8.2pts to 2.441%, and Italian BTPs by +9pts to 3.832%.
Across the Channel, Gilts followed the US T-Bonds like a shadow, with +15Pts to 4.292%.
In Europe, CVS industrial production rose by 0.8% in the Eurozone and 0.7% in the EU in February compared with the previous month, according to Eurostat estimates, following falls of 3% and 2.7% respectively in January.

US rates reacted negatively to US retail sales, which rose by 0.7% sequentially in March, ahead of market expectations, following a 0.9% increase the previous month (revised from an initial estimate of +0.6%).

The Commerce Department, which publishes these figures, states that excluding the automotive sector (vehicles and equipment), US retail sales rose by 1.1% last month, following a 0.6% increase in February.

Manufacturing activity continued to contract in the New York region in April, remaining in negative territory for the fourth month in a row.
The 'Empire State' index - compiled by the Federal Reserve's regional office - came in at -14.3 this month, compared with -20.9 in March.
The weekly hours worked sub-index deteriorated the most, to -10.6 from -10.4 last month, followed by the shipments sub-index (-14.4 vs. -6.9 the previous month) and the six-month forward expectations sub-index deteriorated from 21.6 to 16.7.

Investors' eyes will also be on Beijing, where Chinese gross domestic product (GDP) figures will be published tomorrow, providing valuable clues as to the recovery of the world's second-largest economy.

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