Bonds: German yields rise by one basis point



LONDON (ShareCast) - LONDON (SHARECAST) - The following were some of the yield and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:

US: 1.82% (-1bp)
UK: 1.99% (-2bp)
Germany (new line): 1.50% (-1bp)
France: 2.12% (1bp)
Spain: 5.05% (2bp)
Italy: 4.20% (-2bp)

[NOTE: there are 100bp to a percentage point]

US bond yields slid by one basis point on a day when several key players voiced opinions over the country's current monetary policy. In an interview with Bloomberg, the Federal Reserve's Eric Rosengren was reported saying that he expected the economy would improve. He also admitted that he worries about the costs of quantitative easing although at present he sees room for further QE.

Meanwhile, and for his part, the Federal Reserve's Bank of Minneapolis President Narayana Kocherlakota was even more dovish in a speech offered today, saying that the Federal Reserve should do more to spur economic growth and hiring, by pledging to hold the main interest rate near zero until unemployment had fallen to 5.5 per cent, instead of 6.5 per cent as it currently pledges.

UK yields fell by two basis points on the same day that data came out from the council of Mortgage Lenders showing that UK house purchase loans had risen by 6.3% in November (Xetra: A0Z24E - news) compared to October. Meanwhile, Prime Minister David Cameron rebuffed demands by Conservative MPs for a referendum on Europe before the 2015 general election.

Germany's bond yields fell by 1 basis point according to Bloomberg data after demand at a sale this morning of €4.1bn in 1.50% 2023 (new line) bonds rose, reaching a bid-to-cover ratio 1.7, the Bundesbank reported. Acting as a backdrop, German economy minister Roesler cut his ministry's forecasts for the German economy this year, to 0.4%, albeit while at the same time forecasting an acceleration for next year back up to 1.6%.

Spanish yields rose by two basis points as Prime Minister Rajoy said that Spanish exports had posted their best results in 40 years. Spanish foreign minister Margallo addded that Spain was committed to meeting its deficit targets.

Italian yields fell by two basis points after news reports indicated the government expects Italy to run a full year 2012 surplus of €8bn including energy for the first time since 2002. The government is reportedly to target €620bn in exports by 2015.