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Dec 19, 2013

German yields rise after Fed taper, but guidance takes edge off

LONDON, Dec 19 (Reuters) – German yields held near
seven-week highs on Thursday, a day after the Federal Reserve
said it would trim asset purchases but tempered the move with a
promise to keep interest rates low for longer than previously

Fed Chairman Ben Bernanke said the U.S. central bank would
reduce its monthly asset purchases by $10 billion to $75 billion
and was likely to continue to cut them back steadily, suggesting
its huge dose of quantitative easing could end by late 2014.

Dec 19, 2013

U.S. bonds little changed after Fed policy shift

LONDON, Dec 19 (Reuters) – U.S. Treasuries held within
recent ranges on Thursday after the Federal Reserve tempered
news it would start scaling back its bond-buying program by
signalling interest rates would stay lower for longer.

The Federal Reserve trimmed its monthly asset purchases by
$10 billion to $75 billion but also said it was likely to keep
rates near zero well past the time that the jobless rate falls
below 6.5 percent, especially if inflation expectations remain
below target.

Dec 16, 2013

German Bunds turn flat after upbeat euro zone PMI

LONDON, Dec 16 (Reuters) – German Bunds pared an early rise
on Monday after a survey showed euro zone private sector
activity surpassed expectations in December, against a backdrop
of investor caution ahead of the Federal Reserve’s rate meeting
this week.

Bunds rose in early trade after separate surveys showed
private sector activity in France slowed unexpectedly in
December, while growth in activity in China’s vast factory
sector slowed to a three-month low.

Dec 13, 2013

Two-year German yields at 3-month high as ECB loan repayments surge

LONDON, Dec 13 (Reuters) – Two-year German yields hit a
three-month high on Friday as banks repaid the highest weekly
amount since February to the European Central Bank, getting into
shape for an upcoming balance sheet review.

Banks will repay a massive 22.65 billion euros of crisis
loans early to the ECB next week, as the pace with which banks
pay back the three-year loans they got from the central bank at
the height of the crisis picks up.

Dec 12, 2013

Italian, Spanish bonds hit by capital provisioning report

LONDON, Dec 12 (Reuters) – Italian and Spanish bonds fell on
Thursday after a media report that the ECB could make euro zone
banks hold capital against sovereign bonds to stop weak lenders
using its cash to buy debt from crisis-hit countries.

The Financial Times quoted European Central Bank executive
board member Peter Praet as saying the bank could toughen up
requirements on sovereign bonds – which have traditionally been
treated as risk-free.

Dec 11, 2013

Two-year German yields rise along with short-term rates

LONDON, Dec 11 (Reuters) – Two-year German yields crept
higher on Wednesday, tracking a recent rise in short-term
lending rates on the back of falling liquidity in money markets
and as investors absorbed supply.

Overnight lending rates have been creeping higher as banks
pay back long-term funding lent by the European Central bank at
the height of the euro zone debt crisis.

Dec 11, 2013
via MacroScope

In euro bond markets, world still upside down

Corporate bonds normally yield more than sovereign debt since companies are seen as more likely than states to go bust. But during the euro zone debt crisis, when various governments had to be bailed out, that relationship broke down in Spain and Italy.

Click here for graphic by Vincent Flasseur.

Madrid and Rome are paying more to borrow in the market than similarly-rated companies generally. Ten-year Spanish and Italian sovereign bonds offer a comfortable premium of more than 60 basis points over a basket of BBB-rated corporate debt, even though that gap has more than halved from this year’s highs.

Dec 10, 2013

Italian, Spanish bond yields fall as Rome buys back debt

LONDON, Dec 10 (Reuters) – Italian and Spanish debt premia
hit their lowest since mid-2011 on Tuesday as Rome bought back 4
billion euros of bonds in another move highlighting the improved
funding position for the euro zone’s weaker states.

The two countries, which were at the forefront of the euro
zone debt crisis two years ago, have already hit their 2013
funding targets even though each still has one bond auction
scheduled before the end of the year.

Dec 10, 2013

Euro periphery premium over company debt highlights credit risk

LONDON, Dec 10 (Reuters) – Fear of the euro zone breaking up
has all but vanished but the extra return Spanish and Italian
government bonds offer over corporate paper suggests investors
remain nervous that some states may not repay all their debts.

Corporate bonds normally yield more than sovereign debt
since companies are seen as more likely than states to go bust.
However, after EU governments like Portugal and Greece had to be
bailed out, that relationship reversed for countries on the euro
zone periphery, including major economies Italy and Spain.

Dec 5, 2013

German yields hover near six-week highs as investors brace for ECB

LONDON, Dec 5 (Reuters) – German yields hovered near six
week-highs on Thursday, stabilizing before a rate policy meeting
and one day after strong U.S. data triggered a bond sell-off on
the view that monetary stimulus could be withdrawn.

Investors are particularly sensitive to data this week as
they brace for rate decisions from the European Central Bank and
the Bank of England. A key U.S. jobs number on Friday should
also be decisive for the Federal Reserve’s rates outlook.

    • About Ana

      "Ana Nicolaci da Costa is UK Economics Correspondent, covering monetary and fiscal policy in London. Ana previously worked as Reuters' Economics Correspondent in Brasilia and covered European markets, including the euro zone debt crisis. She began working for Reuters in 2004 in London, after an internship at the Financial Times. Ana has a Master's degree from the University of London and studied political science as an undergraduate at the University of Nottingham and Institut d'Etudes Politiques de Paris."
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