BLBG:Germany’s Bonds Little Changed Before Euro-Area GDP Data
Italy’s government bonds rose for a second day as prospects of a global economic recovery boosted demand for higher-yielding assets and as concern that political paralysis in the country will push up borrowing costs eased.
German 10-year bunds fell for a third day after the Dow Jones Industrial Average (INDU) climbed yesterday to a record high. Italian bonds have reversed losses that pushed yields to the most since November after the inconclusive Feb. 24-25 elections as investors bet that the European Central Bank’s bond-buying program will cap yields amid the political instability.
“It seems that investors have decided to hold on to Italian bonds and wait and see,” said Allan von Mehren, chief analyst at Danske Bank A/S (DANSKE) in Copenhagen. “They are being supported by generally good risk sentiment and stock markets have been doing pretty well the last couple of days, so that’s underpinning the bounce in Italy and Spain.”
Italy’s 10-year yields fell 10 basis points, or 0.1 percentage point, to 4.64 percent at 9:55 a.m. London time. The rate dropped 14 basis points yesterday. The 5.5 percent security maturing in November 2022 gained 0.79, or 7.90 euros per 1,000- euro ($1,304) face amount, to 107.06.
Yields on Italy’s 10-year bonds jumped to 4.96 percent on Feb. 27, the most since November, after the election produced a hung parliament, threatening political paralysis and a reversal of outgoing Prime Minister Mario Monti’s austerity measures.
German 10-year bunds rose two basis points to 1.47 percent. The rate on the nation’s five-year note was little changed at 0.45 percent before a sale of 4 billion euros of the securities.
Italian bonds handed investors a loss of 0.4 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Germany’s debt lost 0.5 percent, the indexes showed.
To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
