Bonds: Rumours US to contribute to Eurozone bail out

Date: Wednesday 11 Jan 2012

These were the interest rates and movements on some of the most watched countries’ benchmark 10 year bonds at 6.19pm in London.

Italy 6.99% (-13bp)
Spain 5.33% (-16bp)
France 3.15% (-9bp)
UK 2.01% (-7bp)
Germany 1.81% (-7bp)
US 1.90% (-6bp)

Bond yields dropped for the distressed euro area countries today following news the US may contribute to an IMF bail out for the troubled single currency region.

The German daily, Handlesblatt, reports a US contribution is dependent on European politicians making “progress” in structuring a coherent response to the current crisis.

The yield on Italian 10 year debt dropped below the 7% level that saw Portugal, Ireland and, of course, Greece, seek bailouts from their Eurozone partners.

Germany also completed a successful auction of 5 year debt at an average yield of 0.9% versus 1.11% at the previous 5 year auction. The bid to cover ratio was 2.8 versus 2.1 last time around.

Tomorrow, however, is a big day as both Spain and Italy look to raise as much as $17bn on international markets.

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