Yields and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:
UK: 1.83% (-7.5bp)
US: 1.76% (-5.8bp)
Germany: 1.57% (-4.6bp)
France: 2.238% (+0.5bp)
Spain: 5.624% (+12.9bp)
Italy: 4.863% (+10.2bp)
[There are 100bp to a percentage point]
A global sell-off on equity markets, disappointing corporate earnings and concerns about the Eurozone debt crisis saw ‘safe-haven’ bonds gain on Tuesday, while borrowing rates in peripheral European nations rose sharply.
‘Risk is officially off in the markets at the moment as problems on both sides of the Atlantic prompt a move into safe havens,’ said analyst Craig Erlam from Alpari. Yields on 10-year benchmark yields in the UK, US and German dropped..
Meanwhile, Spanish bond yields surged today as worries about the country’s financial health increased.
A decent outcome at the regional elections for Prime Minister Mariano Rajoy is thought to have reduced the pressure on him to request a bailout.
Meanwhile, ratings agency Moody’s downgraded five Spanish regions to ‘junk’ today due to the ‘deterioration in their liquidity positions.’
Spain’s central bank said that economic growth worsened to 1.7% in the third quarter, compared with the 1.3% GDP fall the quarter before.
Alpari’s Erlam said: ‘If we learned one thing from this debt crisis it is that strict austerity leads to a fall in growth. With Spain continuing on the austerity program we can expect further drops in the coming quarters.’
Tags: agency moody | bailout | corporate earnings | economic growth | financial health | percentage point | quarters | regional elections | spanish regions | worries