Government bonds

Invesco Perpetual remains positive on the prospects for the Spanish economy despite Moody's hinting it may downgrade the nation's credit rating this morning.

Yields on 10-year UK government bonds dipped below those of US treasuries for the first time in two years today as financial markets began to price in a US default.

Barings' Andrew Cole has slashed the equity weighting on his £28.1m Multi Asset fund by 15% in favour of government bonds as his team becomes increasingly risk averse.

Italian and Spanish bond yields have cooled in early trading after yesterday hitting their widest spread over German bunds since the inception of the euro.

Announcing a haircut on Greek bond holdings would help restore a positive mood to bond markets, which have largely priced in such a move, said DWS Investments' CIO Asoka Wöhrmann.

Spain is facing the same danger of default as Greece, Ireland and Portugal, said M&G's Mike Riddell, following the lacklustre Spanish government bond auction yesterday.

Australian, Norwegian and Canadian government bonds are the new safe haven for bond investors, Ariel Bezalel, manager of Jupiter's £418m Strategic Bond fund, has said.

Iceland is poised to re-enter the bond market for the first time since the collapse of its major banks.

ON BONDS

Henderson's John Pattullo and Jenna Barnard have closed out short duration positions in gilts and treasuries after revising their interest rate expectations.