Spanish 10-year debt fell as the euro-region’s higher-yielding sovereign bonds underperformed German securities amid concern budget cuts and European Central Bank measures are failing to stem the financial crisis.
Ten-year German bunds advanced, pushing yields toward record lows, after government reports added to evidence the global expansion is slowing and spurred demand for the safest assets. Spain’s 10-year yield climbed toward 6 percent after data showed Spanish banks’ borrowings from the ECB jumped by almost 50 percent in March. The nation’s government will today approve measures to crack down on tax fraud.
“Spain’s significant budget measures have proved unable to convince the market that the new government has the fiscal situation fully under control,” said Norbert Aul, a fixed- income strategist at Royal Bank of Canada in London. “The market reaction to the more-or-less-expected borrowing increase only shows the nervousness in the current environment. Spain should remain under pressure and 10-year Spanish yields could move above 6 percent.”
Spain’s 10-year bond yield rose nine basis points to 5.91 percent at 11:22 a.m. London time. The 5.85 percent bond due in January 2022 slid 0.62, or 6.20 euros per 1,000-euro ($1,316) face amount, to 99.575. The rate has climbed 55 basis points over the past two weeks.
The 10-year bund yield fell four basis points, or 0.04 percentage point, to 1.75 percent. The benchmark yield slid to 1.639 percent on April 10, within a basis point of the record 1.636 percent set Sept. 23….”
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