Bonds: French debt gains, Spain and Italy still suffering

Date: Friday 25 May 2012

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

Spain: 6.31% (+15bp)
Italy: 5.66% (+9bp)
France: 2.51% (-3)
Germany: 1.37% (-2bp)
UK: 1.75% (-3bp)
US: 1.74% (-4bp)

A slight divergence from recent patterns in debt markets on Friday although the main story is still the same: Spanish and Italian yields soared.

This week’s EU summit in Brussels failed to produce agreement on so called Eurobonds - common debt instruments issued by the all 17 countries which use the Euro currency.

Germany opposes the idea, while also resisting suggestions that the European Central Bank should intervene directly in debt markets to help the under pressure “peripheral” countries.

The result has been to make German debt even cheaper and make borrowing for Rome and Madrid more expensive.

The one change has been the noticeable drop in French yields, possibly prompted by investors looking for better returns than those available on German bunds.

BS

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