German Bunds Rise on Decline in Confidence; Spain Auctions Bills Germany’s 10-year government bonds advanced for the third time in four days as investor confidence in Europe’s largest economy unexpectedly declined this month, supporting the case for central-bank action to stimulate growth. Two-year yields slipped as a report showed that inflation in the euro area stayed below the European Central Bank’s 2 percent target in June. Bund yields approached the lowest in four weeks before Federal Reserve Chairman Ben S. Bernanke’s testimony to Congress tomorrow amid speculation he’ll give more details on when U.S. stimulus will be slowed. Spanish two-year notes were little changed after the country sold 4 billion euros ($5.23 billion) of short-term debt. “If there is an economy that needs further accommodation, it is the European economy,” said Michael Markovich, head of global interest-rate strategy at Credit Suisse Group AG in Zurich. “The bund seems well priced now. Political uncertainty is still a big problem and this should weigh negatively on the periphery,” he said, referring to bonds from the region’s lower-rated nations. Germany’s 10-year bund yield fell two basis points, or 0.02 percentage point, to 1.56 percent at 11:05 a.m. London time after dropping to 1.54 percent on July 12, the lowest since June 19. The 1.5 percent bond due in May 2023 advanced 0.16, or 1.60 euros per 1,000-euro face amount, to 99.455. The two-year yield dropped two basis points to 0.10 percent. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, fell to 36.3 from 38.5 in June. That’s the first decline in three months. Economists forecast an increase to 40, according to the median of 37 estimates in a Bloomberg News survey. The Spanish two-year note yield was at 2.08 percent, while yields on similar-maturity Italian debt increased three basis points to 1.72 percent. Spain sold 1.63 billion euros of six-month bills and 2.42 billion euros of one-year bills. German bonds handed investors a loss of 0.9 percent this year through yesterday, according to Bloomberg World Bond Indexes. Spanish securities returned 5.5 percent and Italy’s gained 2.3 percent, the indexes show.
Posted on: Tue, 16 Jul 2013 10:23:40 +0000
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