BLBG: Markets From Stocks to Debt to Euro Show Little Panic on Greece
(Bloomberg) -- The euro strengthened, Treasuries pared gains and the yen weakened as markets showed little panic after talks between Greece and its creditors broke down. European stocks erased earlier losses and declines in Greek bonds failed to push yields to record highs.
“The market is clearly betting on a solution being found,” said Peter Kinsella, a senior foreign-exchange strategist at Commerzbank AG in London. “It’s complacent beyond belief.”
While the yield on Greece’s three-year notes rose for a second day to 18.40 percent, it’s below the 21.91 percent rate reached on Feb. 10, which was the highest since the nation’s debt was restructured in 2012. German investor confidence climbed to one-year high before the European Central Bank is scheduled to start its bond-buying program next month. In the U.S., the Federal Reserve releases manufacturing data for the New York area.
The euro gained 0.5 percent to $1.1416 at 6:29 a.m. in New York. The yen fell against all but one of its 16 major peers. Greek three-year note yields rose 82 basis points, while Portugal’s 10-year rate approached a record low. Ten-year Treasury yields slid one basis point to 2.04 percent after earlier falling as much as five basis points. The Stoxx Europe 600 Index added 0.1 percent and Standard & Poor’s 500 Index futures slipped less than 0.1 percent. Oil advanced in London.
“Investors and analysts seem to be quite complacent and are still expecting a positive outcome,” said Christian Lenk, a fixed-income analyst at DZ Bank AG in Frankfurt. “The market seems to be confident in terms of the two parties finding a solution in upcoming days. What’s interesting is the quite relaxed attitude investors have to the periphery. The domino effect everybody had been fearing is much weaker now.”
Meeting Halted
Talks stopped in Brussels after Greek Finance Minister Yanis Varoufakis refused to meet demands that his country request an extension of its existing bailout program. Dutch Finance Minister Jeroen Dijsselbloem, who leads the finance ministers’ group, halted the meeting, saying ministers could reconvene Friday if Greece changes tack.
Greece’s 10-year yield climbed 48 basis points to 10.13 percent. It reached 44.21 percent in 2012 in the run-up to the biggest debt restructuring in history.
Credit-default swaps insuring $10 million of Greek government debt for five years rose by $200,000 to $4.4 million upfront and $100,000 annually, signaling a 71 percent probability of default, according to CMA.
Peripheral Bonds
Portugal’s 10-year bonds climbed today, sending the yield to 2.34 percent, within five basis points of a record low set on Feb. 13. Italy’s 10-year yield fell four basis points to 1.62 percent, while Germany’s rose two basis points to 0.35 percent.
The euro currency advanced 0.4 percent to 1.06255 Swiss francs, gaining against most of its main peers.
Commodity producers led gains among the 19 industry groups, with Anglo American Plc and Rio Tinto Group advancing more than 2 percent.
TNT Express NV slid 10 percent after saying this year will be challenging. Sales last year fell, while net loss widened by 60 percent. Orange SA lost 2.8 percent after the French telecommunications company forecast a drop in earnings this year.
Pandora A/S rallied 18 percent as the Danish maker of charm bracelets posted fourth-quarter profit beat analysts’ estimates and forecast continued revenue growth in the year ahead.
Russia’s ruble gained for a third day, advancing 1.4 percent, and the dollar-denominated RTS index added 2.9 percent, after falling 1.8 percent on Monday.
Ukraine Truce
Five government soldiers were killed and 25 wounded in fighting near the strategic port city of Mariupol, Ukrainian military spokesman Dmytro Chalyi said by phone on Monday. Debaltseve, a key rail junction, was the focus of shelling by insurgents, according to the Defense Ministry in Kiev.
Rebels blame Ukraine for repeatedly violating the truce, according to comments carried by the separatist-run DAN news service. The Obama administration Monday said it’s “gravely concerned” and urged a halt to attacks near Debaltseve.
The European Union expanded sanctions on Monday, adding 19 people and nine entities to its blacklist, including Russian Deputy Defense Minister Anatoly Antonov.
Hong Kong’s Hang Seng China Enterprises Index gained 0.5 percent. The Shanghai Composite Index advanced 0.8 percent in the seventh day of gains, the longest rally since Nov. 28. Trading volume was 26 percent below the 30-day average before the holiday that starts on Wednesday.
One-month non-deliverable forwards on Indonesia’s rupiah erased earlier gains after the central bank unexpectedly cut its main interest rate for the first time in three years.
Oil Rises
West Texas Intermediate oil was up 49 cents from Friday’s close, fetching $53.25 a barrel. WTI floor trading was suspended Monday for the Presidents’ Day holiday in the U.S., with transactions to be booked Tuesday for settlement purposes.
Brent crude for April settlement climbed as much as 75 cents to $62.15 a barrel on the ICE Futures Europe exchange and was at $61.79 as of 9:08 a.m. London time.
Crude is recovering from the lowest prices in almost six years as U.S. drillers cut the number of rigs in service to the fewest since August 2011, according to data from Baker Hughes Inc. There’s a sense of optimism in rising prices and the trend has changed over the past two weeks, Qatar’s Energy Minister Mohammed bin Saleh Al Sada said on Monday.
Wheat for May delivery climbed 1.2 percent to $5.3950 a bushel today. Russian wheat exports ground to a virtual halt last week after the country began taxing shipments in an effort to reduce domestic food prices.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net
To contact the editors responsible for this story: Stephen Kirkland at skirkland@bloomberg.net; Stuart Wallace at swallace6@bloomberg.net Stuart Wallace
