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Bonds: Yields level out as investors eye G8 meeting

Date: Friday 18 May 2012

Bonds: Yields level out as investors eye G8 meeting

These were the yields and movements on some of the most watched 10 year bonds by the close in Europe:

Spain: 6.26% (-6bp)
Italy: 5.78% (-4bp)
France: 2.85% (-2bp)
Germany: 1.42% (+1bp)
UK: 1.83% (-1bp)
US: 1.72% (+3bp)

Bond yield movements seemed to show investors were taking profits after the unprecedented activity of the past week.

Ultra safe German debt fell, albeit from record highs, as the market readied itself for news from the US Presidential residence, Camp David, where the leaders of the G8 group of industrialised nations meet over the weekend.

They will be discussing the ongoing crisis in Europe, where Greek political uncertainty has created an existential crisis for the euro area.

Spain is now firmly in the eye of the storm following the credit downgrade of 16 of its banks by Moody’s, the credit ratings agency. It cited growing unemployment and weak government finances as the reason for its adjustment. No one is inclined to disagree.

Barring a dramatic change of policy following the G8 meeting, the next big event will be the second round of Greek elections in June, following an inconclusive poll on May 6th.

If Greek left wing parties do win enough votes to form a majority, then all bets are off as far as the euro is concerned.

BS

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