LONDON (MarketWatch) — Borrowing costs for most European countries fell on Monday as the European Central Bank kicked off its most aggressive easing program ever.
The yield on 10-year German bunds TMBMKDE-10Y, -14.97% shaved off 6 basis points to 0.344%, while yields for the country’s shorter-dated bonds remained in negative territory, according to electronic trading platform Tradeweb.
Meanwhile in southern Europe, the yield on 10-year Spanish government bonds TMBMKES-10Y, -1.24% fell 2 basis points to 1.217%, a far cry from the more than 7% logged during the height of the European debt crisis. Yields on 10-year Italian government paper TMBMKIT-10Y, -2.35% dropped 3 basis points to 1.287%, while borrowing costs for Portugal TMBMKPT-10Y, -0.65% slipped a basis point to 1.739%.
The declines in borrowing costs came as the ECB started its 60-billion-euro ($65 billion) a month bond buying program, aimed at lifting inflation and boosting growth in the struggling region. The scheme was announced at the central bank’s Jan. 22 meeting and bond yields have moved steadily lower since then.
Economists expect borrowing costs for European countries to gradually pick up when the QE effect spreads to the wider economy. Read: 7 things to know about the ECB’s QE game plan
Greece bucks positive trend
Greek bonds, however, missed out on the QE launch party amid fresh fears the country could run out of money later this month. Eurozone finance ministers, known as the Eurogroup, gather Monday in Brussels to discuss the next tranche of financial aid for the country, but tensions were high even before the meeting started.
The Greek government last week submitted a set of reform proposals needed to unblock the next money installment, but Eurogroup chief Jeroen Dijsselbloem reportedly said on Sunday that the list is “far from complete.” The Eurogroup meeting begins at 3:30 p.m. Brussels time, or 10:30 a.m. Eastern Time.
Meanwhile, Greek finance minister Yanis Varoufakis upped the stakes, telling Italian newspaper Corriere della Sera over the weekend that the country could hold a referendum if creditors raise requests that aren’t acceptable to the government.
The yield on 10-year benchmark Greek bonds jumped 42 basis points to 9.739%, while 2-year borrowing costs surged 1.125 percentage points to 14.996%.
