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German Bunds Decline; Merkel, Sarkozy Find Joint Position on Greece Rescue
By Garth Theunissen - Jul 21, 2011 8:38 AM GMT+0200 Thu Jul 21 06:38:32 GMT 2011
German bonds fell after German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed on a joint position to solve Greece’s debt crisis on the eve of a summit aimed at preventing the problem from spreading.
The decline pushed the yields on 10-year bunds to the highest in almost two weeks. Details of the agreement will be released today when euro-region leaders meet in Brussels, the German and French leaders said in a statement after seven hours of talks in Merkel’s Chancellery in Berlin. The discussions also included European Central Bank President Jean-Claude Trichet and European Union President Herman van Rompuy, who participated by telephone.
“Optimism that Germany and France may come up with something concrete helped to reduce demand for safety,” said David Schnautz, a fixed-income strategist at Commerzbank AG in London. “But we have to wait for the details. I don’t think we are out of the woods yet. The recent rebound in periphery markets may prove short-lived if the outcome of the meeting falls short of expectations.”
Ten-year bund yields increased six basis points to 2.83 percent as of 7:33 a.m. in London, the most since July 11. The 3.25 percent security maturing in July 2021 lost 0.515 or 5.15 euros per 1,000-euro face amount to 103.62. Yields on two-year notes also climbed six basis points, to 1.36 percent, also the highest since July 11.
Greek Yields
European leaders are meeting in Brussels today in an attempt to find common ground on how to fund a second Greek bailout and prevent the euro-region’s sovereign debt crisis from spilling over into Spain and Italy. The disagreement among member states centers on whether a second Greek rescue plan should compel private holders of the nation’s debt to contribute toward bailout costs, a measure that ratings companies have warned would constitute a default.
Weeks of uncertainty on how to address Greece’s debt woes sent yields on two-year Greek debt above 40 percent for the first time yesterday. European leaders are due to gather at 1 p.m. in the Belgian capital after meetings of national government officials earlier in the day.
German government bonds handed investors 1.7 percent this year, compared with 3.6 percent for U.S. Treasuries, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Greek bonds have lost 21 percent, while Portugal’s declined more than 27 percent, the indexes show.
By Garth Theunissen - Jul 21, 2011 8:38 AM GMT+0200 Thu Jul 21 06:38:32 GMT 2011
German bonds fell after German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed on a joint position to solve Greece’s debt crisis on the eve of a summit aimed at preventing the problem from spreading.
The decline pushed the yields on 10-year bunds to the highest in almost two weeks. Details of the agreement will be released today when euro-region leaders meet in Brussels, the German and French leaders said in a statement after seven hours of talks in Merkel’s Chancellery in Berlin. The discussions also included European Central Bank President Jean-Claude Trichet and European Union President Herman van Rompuy, who participated by telephone.
“Optimism that Germany and France may come up with something concrete helped to reduce demand for safety,” said David Schnautz, a fixed-income strategist at Commerzbank AG in London. “But we have to wait for the details. I don’t think we are out of the woods yet. The recent rebound in periphery markets may prove short-lived if the outcome of the meeting falls short of expectations.”
Ten-year bund yields increased six basis points to 2.83 percent as of 7:33 a.m. in London, the most since July 11. The 3.25 percent security maturing in July 2021 lost 0.515 or 5.15 euros per 1,000-euro face amount to 103.62. Yields on two-year notes also climbed six basis points, to 1.36 percent, also the highest since July 11.
Greek Yields
European leaders are meeting in Brussels today in an attempt to find common ground on how to fund a second Greek bailout and prevent the euro-region’s sovereign debt crisis from spilling over into Spain and Italy. The disagreement among member states centers on whether a second Greek rescue plan should compel private holders of the nation’s debt to contribute toward bailout costs, a measure that ratings companies have warned would constitute a default.
Weeks of uncertainty on how to address Greece’s debt woes sent yields on two-year Greek debt above 40 percent for the first time yesterday. European leaders are due to gather at 1 p.m. in the Belgian capital after meetings of national government officials earlier in the day.
German government bonds handed investors 1.7 percent this year, compared with 3.6 percent for U.S. Treasuries, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Greek bonds have lost 21 percent, while Portugal’s declined more than 27 percent, the indexes show.
