French and Austrian Bonds Leap as Safe Heaven Bets Look to Diversify Beyond Germany

“French bonds rose, sending five-year yields to a record low, and Austrian debt gained as investors favored higher-yielding alternatives to German securities amid the deepening euro-area sovereign debt crisis.

Austria’s five-year note yields dropped to an all-time low after a European Union summit ended with leaders divided over joint debt sales and offering no relief for Spain. AAA rated countries said joint borrowing would force up their own interest rates and give deficit-prone states an incentive to continue spending. Germany’s bonds erased gains that had pushed 10-year yields to a new low after business confidence fell more than analysts forecast in May.”

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