European Bond Yields Hit Two Week Highs; Still Far Below Nosebleed Territory & Auctions Go Off Well

“Italian bonds fell, driving 10-year yields to a two-week high, and German bunds climbed as European officials struggled to reach agreement on a financial rescue for Greece, boosting demand for safer assets.

Spanish bonds dropped before the nation sells as much as 4 billion euros ($5.2 billion) of securities. France plans to auction as much as 10.3 billion euros of notes and index-linked bonds. Europe’s creditor countries are discussing more control over how future aid to Greece is used, Luxembourg Prime Minister Jean-Claude Juncker said yesterday.

“There is a spread-widening pressure across the board,” said Matteo Regesta, a senior interest-rate strategist at BNP Paribas SA in London. “It’s a function of risk-off mode coming back to the surface as a result of these conflicting and quite confused and contradictory statements coming from policy makers.”

The Italian 10-year bond yield rose 10 basis points, or 0.1 percentage point, to 5.84 percent at 9:37 a.m. London time. The rate reached 5.93 percent, the highest since Feb. 1. The 5 percent securities maturing in March 2022 fell 0.735, or 7.35 euros per 1,000-euro face amount, to 94.275.

The yield on Spain’s 10-year bond climbed nine basis points to 5.53 percent, increasing the spread over German bunds by 11 basis points to 369 basis points. It reached 377 basis points, the most since Jan. 9. The German 10-year bond yield fell two basis points to 1.84 percent.”

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