Spanish two-year notes rose for a second week, with yields dropping to a record, as details of the European Central Bank’s targeted-loans program boosted bets this year’s rally in fixed-income assets can extend.
Italian two-year securities also gained and Irish 10-year yields fell to the lowest on record as ECB President Mario Draghi said the take-up for private lenders in its longer-term refinancing operations could be as much as 1 trillion euros ($1.36 trillion).
German one-year rates slipped below zero for the first time since June 2013 as the prospect of an extended period of record-low interest rates boosted demand for government debt.
“Despite the rally that has taken place since the beginning of the year, there is still some room to go for the periphery,” said Luca Cazzulani, a senior fixed-income strategist at UniCredit SpA in Milan.
“We remain in a situation where policy rates are low and they are going to stay low for a long period.” Spain’s two-year yields declined eight basis points, or 0.08 percentage point, this week to 0.4 percent as of 5 p.m.
London time yesterday, after dropping to 0.382 percent, the least since Bloomberg began compiling the data in 1993.
The rate has dropped 1.1 percentage points this year. The 3.25 percent note due in April 2016 rose 0.1, or 1 euro per 1,000-euro face amount, to 105.12.
Italy’s two-year yield slid 10 basis points from June 27 to 0.49 percent and the rate on Irish 10-year debt dropped three basis points this week to 2.32 percent after reaching 2.304 percent yesterday.
Loan Details
ECB policy makers held the main refinancing rate at a record 0.15 percent and maintained the deposit rate at minus 0.1 percent at a July 3 meeting.
Details of the ECB’s loan program were also released, showing banks will be able to access TLTRO funding they can hold for as long as four years if they maintain or increase the size of their loan portfolio to companies and households. Banks that are deleveraging can get the funding provided they meet certain criteria.
Benchmark German 10-year bund yields were little changed this week at 1.27 percent. The nation’s one-year rate dropped to as low as minus 0.004 percent yesterday and the two-year note yield touched 0.01 percent, the least since May 2013.
Germany is due to sell 1 billion euros of inflation-linked bonds due in 2018 next week, while Austria, Ireland, Italy and the Netherlands are also due to auction government debt.
Greece was said to be selling three-year notes as early as next week, according to a government official who asked not to be named because the auction has yet to be announced. Euro-area securities returned 7.1 percent this year through July 3, Bloomberg World Bond Indexes show.
That’s more than twice the gains recorded by bond markets in the U.S. and the U.K., where central banks are debating when to tighten policy.
Greek and Portuguese securities led with gains of 30 percent and 16 percent, while German debt earned 4.6 percent.
bloomberg.com
Italian two-year securities also gained and Irish 10-year yields fell to the lowest on record as ECB President Mario Draghi said the take-up for private lenders in its longer-term refinancing operations could be as much as 1 trillion euros ($1.36 trillion).
German one-year rates slipped below zero for the first time since June 2013 as the prospect of an extended period of record-low interest rates boosted demand for government debt.
“Despite the rally that has taken place since the beginning of the year, there is still some room to go for the periphery,” said Luca Cazzulani, a senior fixed-income strategist at UniCredit SpA in Milan.
“We remain in a situation where policy rates are low and they are going to stay low for a long period.” Spain’s two-year yields declined eight basis points, or 0.08 percentage point, this week to 0.4 percent as of 5 p.m.
London time yesterday, after dropping to 0.382 percent, the least since Bloomberg began compiling the data in 1993.
The rate has dropped 1.1 percentage points this year. The 3.25 percent note due in April 2016 rose 0.1, or 1 euro per 1,000-euro face amount, to 105.12.
Italy’s two-year yield slid 10 basis points from June 27 to 0.49 percent and the rate on Irish 10-year debt dropped three basis points this week to 2.32 percent after reaching 2.304 percent yesterday.
Loan Details
ECB policy makers held the main refinancing rate at a record 0.15 percent and maintained the deposit rate at minus 0.1 percent at a July 3 meeting.
Details of the ECB’s loan program were also released, showing banks will be able to access TLTRO funding they can hold for as long as four years if they maintain or increase the size of their loan portfolio to companies and households. Banks that are deleveraging can get the funding provided they meet certain criteria.
Benchmark German 10-year bund yields were little changed this week at 1.27 percent. The nation’s one-year rate dropped to as low as minus 0.004 percent yesterday and the two-year note yield touched 0.01 percent, the least since May 2013.
Germany is due to sell 1 billion euros of inflation-linked bonds due in 2018 next week, while Austria, Ireland, Italy and the Netherlands are also due to auction government debt.
Greece was said to be selling three-year notes as early as next week, according to a government official who asked not to be named because the auction has yet to be announced. Euro-area securities returned 7.1 percent this year through July 3, Bloomberg World Bond Indexes show.
That’s more than twice the gains recorded by bond markets in the U.S. and the U.K., where central banks are debating when to tighten policy.
Greek and Portuguese securities led with gains of 30 percent and 16 percent, while German debt earned 4.6 percent.
bloomberg.com
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