BLBG:Spanish, Italian Bonds Climb As Draghi Pledges To Preserve Euro
Spanish and Italian bonds advanced for a second day after European Central Bank President Mario Draghi said the central bank will do whatever is needed to preserve the euro.
Spain’s two-year yields fell the most this month after Draghi said addressing high yields on sovereign debt was within the central bank’s mandate. German bunds declined as his comments damped demand for the region’s safest assets. Irish two-year yields dropped below 4 percent for the first time since November 2010 after the debt agency announced a bond switch.
“Draghi’s comments are important, especially the phrases that suggests the ECB is contemplating doing something actively to bring down yields for Spain and Italy,” said Piet Lammens, head of research at KBC Bank NV in Brussels. “It takes some of the very sharp pressure off Spanish and Italian yield. Draghi is clearly opening the door to doing something.”
Spain’s two-year yield dropped 48 basis points, or 0.48 percentage point, to 5.94 percent at 11:58 a.m. London time after falling as much as 49 basis points, the most since June 29. The 4.75 percent note due in July 2014 rose 0.87, or 8.70 euros per 1,000-euro face amount, to 97.825.
Italy’s two-year note yield declined 49 basis points to 4.45 percent. Similar-maturity Irish yields dropped 17 basis points to 3.95 percent.
To contact the reporters on this story: Lucy Meakin in London at lmeakin1@bloomberg.net; Emma Charlton in London at echarlton1@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
