Date: Monday 16 Apr 2012
These were the yields and movements on some of the most watched 10 year bonds just before the close in Europe:
Spain: 6.07% (+9bp)
taly: 5.59% (+6bp)
France: 3.02% (+7bp)
Germany: 1.72% (-2bp)
UK: 2.03% (-1bp)
US: 1.96% (-3bp)
The interest rate on Spanish 10 year bonds rose above 6% on Monday as concerns the European debt crisis is worsening.
The country’s securities have been falling on world markets since the beginning of March when the Prime Minister Mariano Rajoy said Spain would be unable to meet budget deficit targets agreed with the other Eurozone countries.
Today he reiterated the gravity of Spain’s position saying the “Fundamental objective at the moment is to reduce the deficit...If we don’t achieve this, the rest won’t matter: we won’t be able to fund our debt.”
There have been calls for the European Central Bank to begin buying Spanish bonds but currently the ECB appears reluctant to support its fourth largest economy with direct debt purchases.
Spain is set to try and sell 12 month and 18 month bonds tomorrow, that sale will be a crucial test of market sentiment.
Meanwhile in the US retail sales rose 0.8% in March, better than expected, pushing up bond prices and reducing the yield.
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