Yields Continue to Fall in Spain as EU Leaders Prepare to Meet

“Spanish government bonds rose for a third day after the nation sold more than its maximum target at an auction and as European Union leaders gathered for a two-day summit in Brussels.

Spain’s 10-year yields dropped to the lowest level since April as German Chancellor Angela Merkel told lawmakers in Berlin that stability was taking hold after three years of crisis in the euro area. Spanish securities surged yesterday after Moody’s Investors Service said this week it would keep the country’s credit rating at investment grade. France auctioned notes and inflation-linked bonds today and Ireland sold bills.

“The Spanish auction went as well as could be expected,” said Elisabeth Afseth, a fixed-income analyst at Investec Bank Plc in London. “Yields are a bit lower and the volumes they managed to do on the 10-year was a positive. Some positive comments out of the European meetings today should also offer some support.”

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