Italy held another auction with yields hitting two year lows. The ECB pledge is helping yields trade lower across the board.
Comments »Should We Expect a Flash Crash in the Treasury Market ?
Swaps Showing 99% Chance of QE and ZIRP Until 2015+
“Just six months ago, money market traders expected the Federal Reserve to raise interest rates by the end of 2013. Now, they see borrowing costs staying at record lows for about three more years as the economic outlook worsens.
Bond market measures from overnight index swaps, which indicate no increase in the federal funds rate until mid-2015, to a 62 percent decline in a measure of volatility in government bonds signal that rates will stay near zero for longer. The gapbetween two- and five-year Treasury yields, which decreases when traders expect benchmark rates to remain subdued, is more than 50 percent narrower than its average since 2008.
Investor expectations for sluggish growth and low inflation remain intact even though the collapse of Lehman Brothers Holdings Inc., which triggered the worst financial crisis since the Great Depression, happened four years ago. While the economy expanded in the second quarter, the unemployment rateremained above 8 percent for the 43rd-straight month in August.”
Comments »Spanish and Italian Bond Yields Fall on ECB Buying Plan
“Spanish and Italian notes rose after European Central Bank President Mario Draghi was said to tell officials he would be comfortable buying three-year securities to lower borrowing costs for nations in financial distress.
Yields on Spanish and Italian two-year debt fell to the least ever relative to 10-year bonds amid speculation the central bank’s action will provide only temporary respite, buying the nations time to plug their deficits. German 10-year bunds fell for a third day, pushing the yields up to the most in more than a week as demand for the safest assets waned. Austria sold bonds maturing in 2017 and 2019, while Greece’s securities advanced as it auctioned bills.
“We can expect the short end to perform pretty well, the comment that the ECB can go up to three years was positive news,” said Allan von Mehren, chief analyst at Danske Bank A/S (DANSKE) in Copenhagen. “There’s still a lot of uncertainty about the whole underlying structure of the project and that’s going to make it difficult for yields in the longer end to come down significantly.”
Comments »Australian Investors Flock to Bonds and Ditch Currency as Building Permits Fall More Than Expected
Investors are beginning to shun risk and find safety in the land down under.
Comments »Italy Kicks Off a Bill Auction With the Lowest Yield Since March
“Italy sold 9 billion euros ($11.3 billion) of Treasury bills at the lowest rate since March on optimism the European Central Bank will intervene to curb the country’s borrowing costs.
The Rome-based Treasury sold the 181-day bills at 1.585 percent, down from 2.454 percent at the last sale of similar- maturity debt on July 27. Investors bid 1.69 times the amount of bills offered, up from 1.61 times last month.”
Comments »Spanish Bonds Fall Again on Funding Concerns
“Spain’s 10-year bonds declined for a second day on concern the country will struggle to finance itself as a call for assistance from its most indebted region turned investor attention to other troubled provinces.
The losses pushed yields to the highest in a week after Catalonia, Spain’s largest region, announced yesterday it would seek 5 billion euros ($6.27 billion) in aid after being shut out of financial markets. Italy’s bonds reversed losses after the nation sold 9 billion euros of six-month bills at the lowest yield since March. It aims to sell a combined 7.5 billion euros of debt due in 2017 and 2022 tomorrow. German 10-year bund yields fell to the lowest in more than three weeks.”
Comments »Yields Continue to Fall on Spanish Bonds
“Yields on Spanish bonds dropped to a six-week low on speculation leaders will agree on a plan to contain the debt crisis. European stocks erased gains and the euro retreated after Germany’s Bundesbank stepped up its criticism of the European Central Bank’s bond-buying program.
Spain’s 10-year yield declined 23 basis points to 6.22 percent at 7:28 a.m. in New York, the least since July 4, while similar-maturity Italian yields slid three basis points to 5.76 percent. The euro slipped 0.2 percent to $1.2305, after appreciating 0.2 percent. Ten-year Treasuries fell, extending a four-week decline. The Stoxx Europe 600 Index lost 0.1 percent after gaining as much as 0.3 percent. Standard & Poor’s 500 Index futures were little changed. Copper sank 1 percent and nickel slipped 1.3 percent.”
Comments »BoA Tries to Explain the Recent Sell Off in Bonds
“The sell-off in Treasury bonds has sent yields racing higher over the past few weeks, and no one really seems to be sure of exactly what is driving the move.
It even caused Bill Gross, who runs the world’s biggest bond fund at PIMCO, to pitch a strange explanation for the move on CNBC yesterday: that Paul Ryan was helping to drive the latest sell-off in the bond market.
BofA fixed income strategists Priya Misra and Shyam Rajan chalk up the drop in bond prices to three main factors – relative stability in European financial markets recently, better economic data out of the United States, and mortgage originators hedging against interest rate risk now that rates have begun to rise due to the first two factors.”
Comments »Italy Gets Off an 8 Billion Euro Treasury Auction With Yields Ticking Up Slightly
“Italy sold 8 billion euros ($9.9 billion) of Treasury bills as borrowing costs rose slightly amid speculation the European Central Bank’s plan to purchase the securities of indebted nations won’t be sufficient to curb the region’s debt crisis.
The Rome-based Treasury sold the 364-day bills at 2.767 percent, up from 2.697 percent at the last sale of similar- maturity debt on July 12. Investors bid 1.69 times the amount of bills offered, up from 1.55 times last month.”
Comments »Chinese Investors Dump Money Into New Zealand Bonds
Chinese and other investors have been bidding up N.Z. bonds as they seek a safe haven in a global slowdown.
As a result N.Z. enjoys lower than normal interest rates and their currency has popped over 4% this year.
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Italian Banks Increase Their Sovereign Debt Holdings
“Italian banks’ purchases of the country’s sovereign debt rose to a record in June as concerns that Italy may be forced to seek a bailout discouraged foreign investors.
Banks boosted their holdings of Italian government bonds by about 14 billion euros ($17 billion) in June to 316 billion euros, according to a Bank of Italy report today.
Italian banks “have been holding the fort at government debt auctions in the absence of foreign investors,” said Nicholas Spiro managing director of Spiro Sovereign Strategy in London by e-mail. “The run on the bond markets of Spain and Italy continues unabated and domestic banks have been left to pick upthe slack. The question is how much longer they will be able to plug the gap if foreign investors continue to steer clear of Spanish and Italian debt.”
Comments »Spanish and Italian Bond Yields Halt Their Fall
Since Draghi’s comment of “doing what ever it takes” to save the Euro and debt ridden countries; bond yields have fallen. As of today that trend has halted and we have seen a bit of a spike today in Italy and Spain.
Comments »Investors Continue to Find safety in German Bonds
Despite a risk on rally in global markets, money is still being socked away in German bonds.
Comments »Italian and Spanish Bond Yields Go Parabolic
Treasury to Issue Floating Rate Paper to Investors
German Bonds Catch a Higher Bid as Concerns Grow That the ECB Will Not Meet Clam Status
Investors seeking safety bought up German bonds in anticipation the ECB will fall short of stemming the debt crisis.
Comments »Spanish and Italian Bond Yields Continue to Fall
Bond yields for the most troubled European nations continued to fall as markets continue to have faith in the words of ECB policy makers.
Comments »Spanish and Italian Yields Fall as Speculation Rises Over ECB Bond Buying
“Spanish and Italian bonds surged for a third day on speculation euro-area policy makers will sanction purchases of government debt to ease the debt crisis.
Italy’s 10-year yields fell below 6 percent for the first time in a week after Le Monde reported that the European Central Bank is preparing to buy securities in the secondary market, followed by primary-market purchases from the region’s bailout funds. German bund yields climbed to a three-week high after Finance Minister Wolfgang Schaeuble said today he welcomed comments from ECB President Mario Draghi that officials will do whatever it takes to preserve the euro.”
Comments »Spanish and Italian Bond Yields Fall as Speculation Rises That the ESM Will Get Increased Firepower
“Spanish and Italian bonds rose on speculation the European Central Bank will augment the firepower of the region’s bailout fund as policy makers step up efforts to contain contagion from the debt crisis.
The gain pushed Spain’s two-year note yield down from a euro-era record after ECB council member Ewald Nowotny said there are arguments in favor of giving the European Stability Mechanism a banking license. German bunds fell for a third day as the nation sold 2.32 billion euros ($2.81 billion) of 30-year debt at a record-low yield. Business confidence in Europe’s biggest economy slid to the lowest level in more than two years in July, according to a report.”
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