Bonds: Spanish yields rise on German bail out "nein"

Date: Wednesday 07 Dec 2011

Sovereign debt investors spent Wednesday absorbing the news that Germany opposes the idea of running two separate bail out funds as a means of containing the ongoing Eurozone crisis.

Interestingly however French 10 year bonds yields fell 2.5 basis points to hit 3.125% at 6PM in Paris - this despite a poll by Reuters of 13 economists in which 11 said they believed France would lose its AAA debt rating.

Spanish 10 year debt saw its yield rise a worrying 22.1bp to 5.431%. Interest rates on Italian 10 year notes climbed 12.1bp to 5.99%, while on US 10 year treasuries they dropped 4.4bp to 2.05%, on UK Gilts by 1.4bp to 2.23% and German 10 year bunds were yielding 2.05% at the close, a drop of 4.4bp.

Most eyes will now turn towards the European Central Bank tomorrow which is expected to cut its key interest rate from 1.25% to 1%.

BS

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