Bonds: Periphery bond yields drop on hopes for Greek deal
These were the movements in some of the most widely followed long-term sovereign bond yields:
US: 2.16% (+2bp)
UK: 1.88% (+1bp)
Germany: 0.55% (+1bp)
France: 0.85% (+0bp)
Italy: 1.86% (-8bp)
Spain: 1.80% (-6bp)
Japan: 0.39% (-3bp)
Portugal: 2.49% (-5bp)
Greece: 11.10% (-70bp)
Eurozone periphery bond yields headed lower on reports that Greek officials are now working on an agreement with their international counterparts aimed at alleviating the country’s looming financial crisis, but some economists and analysts reacted quite coolly to the news.
Jonathan Loynes, chief European economist at Capital Economics, had this to say: “we maintain our position that any deal which emerges over the coming days is likely to be nothing more than a stop-gap and will not address the fundamental issue of Greece’s contracting economy and expanding debt mountain.”
Indeed, the vice-president of the European Commission went on record as saying that a deal was not imminent and even the Greek official who made the initial remarks which set off the buying spree admitted there were still disagreements with creditors.
Greek two-year note yields dropped by 106 basis points to reach 23.80%.
In parallel, via the Queen’s speech the new government set out its priorities for the next parliament.
These are, foremost, to hold an in/out referendum on Europe before 2017 and passing a bill which will avoid income tax, VAT or national insurance rising over the next legislature.
Katja Hall, CBI Deputy Director-General gave the speech a resounding endorsement saying: “This is a jam-packed Queen’s Speech, with a strong focus on stepping up a gear on the economic recovery – locking in growth, creating jobs and boosting investment right across the country.”