“German 10-year bunds fell for the first time in five days after the European Central Bank said it would support Cyprus as the nation negotiates an international bailout, damping demand forEurope’s safest fixed-income assets.
Benchmark yields climbed from near an 11-week low even as Germany sold 3.36 billion euros ($4.34 billion) of the securities at the lowest rate since July. The ECB reaffirmed its commitment to offer funding to Cyprus yesterday, after Cypriot lawmakers rejected a levy on bank deposits, throwing into limbo a rescue package designed to keep it in the euro. Spanish and Italian securities advanced.
“We had a big move in bunds yesterday but things are stabilizing,” said Luca Cazzulani, a senior fixed-income strategist at UniCredit SpA (UCG) in Milan. “Investors are waiting for some more news to get a better insight into what is going to happen. There are some factors which may be supportive of risk, including the ECB saying it would provide liquidity.”
German 10-year bund yields rose three basis points, or 0.03 percentage point, to 1.37 percent at 11:48 a.m. London time. The rate dropped to 1.34 percent yesterday, the lowest since Jan. 2. The 1.5 percent security due February 2023 fell 0.235, or 2.35 euros per 1,000-euro face amount, to 101.18.
The two-year note yield added one basis point to 0.014 percent, after dropping to minus 0.006 percent yesterday, also the least since Jan. 2.
