By Keith Jenkins - Sep 15, 2010 4:58 PM GMT+0800
German bonds fell as the Bank of Japan sold yen, curbing investors’ appetite for the euro- region’s safest assets before the German government sells 10- year securities.
Bunds also retreated before a report that economists say will show consumer prices in the euro area rose by 0.2 percent in August. Japan intervened in the currency market for the first time since 2004 after the yen reached a 15-year high against the dollar. The German government plans to sell 5 billion euros ($6.5 billion) of 10-year bonds today. Portugal will sell 750 million of 12-month Treasury bills.
“The Bank of Japan’s intervention gave risk assets a boost, and that spilled over and had a negative impact on bunds,” said David Schnautz, a fixed-income strategist at Commerzbank AG in London. “The 10-year bund re-opening may give minor headwinds to the market, but not a major burden.”
The yield on the bund, Europe’s benchmark security rose 2 basis points to 2.4 percent as of 9:37 a.m. in London. It reached 2.47 percent on Sept. 13, the highest since Aug. 11. The 2.25 percent security maturing in September 2020 fell 0.17, or 1.70 euros per 1,000-euro face amount, to 98.73. The two-year note yield also gained 2 basis points, to 0.74 percent.
German bonds have declined this month, with the 10-year yield advancing 28 basis points, amid reports that indicate the global economic recovery is on track. Data on Sept. 11 showed China output rose 13.9 percent last month from a year earlier, faster than economists forecast.
Greek Spread
The extra yield investors demand to hold Greek 10-year debt instead of bunds fell 2 basis points to 898 basis.
Greece sold 26-week Treasury bills yesterday. Greek banks bought 70 percent of the bills, Imerisia newspaper said today, without saying where it got the information. Greece plans to sell 13-week bills on Sept. 21.
German bonds have returned 8.7 percent this year, compared with an 8 percent gain for U.S. Treasuries, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Portuguese debt has lost 4.5 percent, while Greek securities have given up 19 percent, the indexes show.
To contact the reporter on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net
From Bloombergs published on Sep 15, 2010 4:58 PM GMT+0800