Bonds: Europe mulls the end of austerity

Date: Tuesday 22 May 2012

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

Spain: 6.08% (-20bp)
Italy: 5.58% (-21bp)
France: 2.79% (-6)
Germany: 1.47% (+4bp)
UK: 1.87% (+3bp)
US: 1.77% (+3bp)

Italian and Spanish debt climbed, causing dramatic falls in their respective yields as the emphasis in Europe appeared to be swinging away from austerity and towards growth.

EU leaders are scheduled to meet in Brussels this week in the wake of elections in France that swept the socialist candidate, Francois Hollande, to power.

He is set to try and persuade Germany of the merits of encouraging growth within the imperilled Eurozone, rather than the German solution of government cuts.

With yields on peripheral debt at record highs and austerity noticeably not resolving the crisis, Chancellor Merkel just may be in the mood to listen.

BS

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