Bonds: Distressed countries see yields edge up

Date: Friday 23 Dec 2011

No catastrophe on the sovereign bond market today but Spain and Italy’s yields are ticking upwards. These were the movements on the yields of 10 year bonds amongst of some of the most watched countries at 5:15PM.

Italy 6.981% (+6.4bp)
Spain 5.377% (+1.4bp)
France 3.012% (-6bp)
UK 2.04% (-1.2bp)
Germany 1.96% (+1.2bp)
US 2.03% (+8.6bp)

The rise in the US yield took place amidst positive data on new house purchases which gained 1.6% in November to hit an annualised rate of 315,000, the highest since the spring.

Orders for durable goods in the US also rose by 3.8% in November, above expectations of around 2%.

French GDP growth for the third quarter has been revised down to 0.3% from 0.4%.

UK service sector output contracted at a 0.7% rate in October versus the previous month.

There is still concern that the Eurozone will fail to contain its sovereign debt crisis. One of the European Central Bank's outgoing executive board members, Lorenzo Bini Smaghi, has today indicated in the Financial Times that the ECB should not shy away from employing quantitative easing if the risks of deflation increase.

BS

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