Europe Stay updated with Business News, Pakistan news, Current world news and latest world news with Business Recorder.. http://www.brecorder.com/markets/fixed-income/europe.html Sun, 05 Jul 2015 07:47:56 +0000 SRA Framework 2.0 en-gb Two-year gilt yields hit seven-month peak as market eyes BoE outlook http://www.brecorder.com/markets/fixed-income/europe/246804-two-year-gilt-yields-hit-seven-month-peak-as-market-eyes-boe-outlook.html http://www.brecorder.com/markets/fixed-income/europe/246804-two-year-gilt-yields-hit-seven-month-peak-as-market-eyes-boe-outlook.html imageLONDON: Short-dated gilt yields rose to their highest level since November on Thursday, adjusting further to recent comments from Bank of England policymakers who suggested they could soon vote to hike interest rates.

The two-year British government bond yield peaked at 0.699 percent, its highest level since Nov. 7, and was last 3 basis points up on the day at 0.685 percent.

The five-year yield, while rising less strongly than the two-year gilt yield, touched a new eight-month high for the second session in a row.

Three members of the BoE's Monetary Policy Committee this week highlighted encouraging signs in Britain's labour market, with Martin Weale in particular hinting he could soon vote to hike rates from their record low level.

And on Thursday, BoE Deputy Governor Minouche Shafik said it would be "overly gloomy" to interpret low gilt yields as a signal of a prolonged period of low growth or low inflation.

"We've seen a few hawkish MPC members coming out and it seems the balance of probability is shifting more towards higher rates, probably earlier than what the market was pricing in before," said Vatsala Datta, strategist at RBC.

Until last week's labour market data, markets were pricing a first BoE rate hike for around midway through 2016. Now they are priced for March, said Datta.

Short-dated gilt prices underperformed against German Bunds, which rose slightly as euro zone finance ministers gathered to discuss proposals to avoid a default by Greece.

The premium that two-year gilts offer over the equivalent German Bund rose to its highest level since early October, peaking at 89.7 basis points, and was last at 88 basis points -- up 3 basis points on the day.

Copyright Reuters, 2015

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imad_kueconomist@yahoo.com (Imaduddin) Europe Thu, 25 Jun 2015 19:54:27 +0000
Euro zone bond markets turn cautious on Greek deal prospects http://www.brecorder.com/markets/fixed-income/europe/246658-euro-zone-bond-markets-turn-cautious-on-greek-deal-prospects.html http://www.brecorder.com/markets/fixed-income/europe/246658-euro-zone-bond-markets-turn-cautious-on-greek-deal-prospects.html imageLONDON: Italian, Spanish and Portuguese borrowing costs rose on Wednesday as doubts over a deal to save Greece from default and keep it in the euro zone re-emerged.

Yields on top-rated German Bunds fell as investors sought refuge in safe-haven assets.

A Greek government official said Prime Minister Alexis Tsipras told associates that creditors had rejected proposals presented by Athens to bridge a budget gap.

Tsipras made the comments before heading to Brussels to meet the heads of Greece's three creditor institutions: the European Commission, the European Central Bank and the International Monetary Fund, the official said in a statement.

A meeting of euro zone finance ministers at 1700 GMT had been expected to come close to ending the logjam in talks on a cash-for-reform deal.

The assumption in the market had been that the latest reform proposals by Greece have been welcomed by European policymakers as a good basis for negotiations.

Greek economy minister George Stathakis said "two or three" items were yet to be settled.

"Most people were assuming they'd agree on something," Merrion Stockbrokers chief economist, Alan McQuaid, said.

"I was quite relaxed thinking a deal might get done and now you get this bombshell.

Is that the end of it? I don't know." Objections to the deal from some in Tsipras' leftist Syriza party also warranted caution, analysts said.

Italian, Spanish and Portuguese bond yields rose by up to 3 basis points.

The first two traded at 2.13 percent, while the later traded at 2.79 percent.

Trading was volatile with peripheral yields trading about 10 basis points higher earlier in the session. German 10-year Bund yields fell 3 basis points to 0.84 percent, having traded between 0.81 percent and 0.89 percent, respectively.

They were still up about 8 basis points since last week as hopes for a deal rose following Greece's latest proposal to creditors.

"It's clear that it's not yet a done deal," KBC strategist Piet Lammens said. "It will be a Greece-watching day, looking at rumours and comments out of these meetings." Greece is fast running out of money.

It is due to pay 1.6 billion euros in a loan tranche to the IMF at the end of the month and officials said Athens would be unable to pay without financial aid.

The mood remained largely optimistic.

At the Euromoney Global Borrowers and Investors Forum in London on Tuesday, about 70 financial market professionals attending a panel discussion were asked to raise their hand if they thought the market was too complacent on Greece.

Only one hand was up. Officials from euro zone government debt agencies and state treasuries have also said market prices reflected the risks surrounding Greece.

Copyright Reuters, 2015

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Wed, 24 Jun 2015 12:28:37 +0000
Greek bonds have not traded on electronic platform for a month http://www.brecorder.com/markets/fixed-income/europe/246282-greek-bonds-have-not-traded-on-electronic-platform-for-a-month.html http://www.brecorder.com/markets/fixed-income/europe/246282-greek-bonds-have-not-traded-on-electronic-platform-for-a-month.html imageLONDON: Investors have not traded Greek government bonds on the HDAT electronic platform for almost a month as the country struggles to reach a vital cash-for-reform deal with its creditors, data from Greece's central bank showed on Friday.

The data shows not a single bond has been traded since May 20, in a sign investors have moved to the sidelines, lacking the appetite to buy what is currently considered one of the riskiest assets in the world.

In what is widely billed as another last-ditch attempt to break the deadlock, euro zone leaders will hold an emergency summit on Monday evening on Greece, where bank withdrawals have accelerated and government revenues slumped.

In May and April only 4 million euros worth of bonds have been traded, compared with 63 million euros in March, 241 million in February and 560 million in January.

About 10.4 billion euros were traded in 2014. Greek government bonds trade mostly over the counter, but the data from HDAT is a proxy for total volumes, traders say.

The last barren period of this length on HDAT was just before Greece's debt restructuring in March 2012. From September 2011 to February 2012 only 7 million euros of Greek bonds changed hands.

Copyright Reuters, 2015

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Fri, 19 Jun 2015 12:57:06 +0000
Italy, Spain, Portugal bond yields rise with no Greek breakthrough http://www.brecorder.com/markets/fixed-income/europe/246244-italy-spain-portugal-bond-yields-rise-with-no-greek-breakthrough.html http://www.brecorder.com/markets/fixed-income/europe/246244-italy-spain-portugal-bond-yields-rise-with-no-greek-breakthrough.html imageLONDON: Italian, Spanish and Portuguese bond yields rose in a nervous market on Friday after a euro zone finance ministers' meeting ended the previous day with no breakthrough in deadlocked Greek debt talks.

Euro zone leaders will now hold an emergency summit on Monday to try to avert a default at the end of the month in Greece, where bank withdrawals have accelerated and government revenues slumped.

The European Central Bank's governing council will hold a telephone conference on Friday to discuss extending emergency liquidity for Greek lenders, a day after one ECB executive board member questioned whether they would be able to open next week.

Some in the market were still hopeful that a last-minute solution will be found, but there was modest selling pressure on bonds issued by euro zone countries most vulnerable to contagion from Greece.

Italian, Spanish and Portuguese 10-year yields were five to seven basis points higher at 2.35 percent, 2.34 percent and 3.16 percent, respectively. Spanish yields reversed almost all of Thursday's falls after strong demand at a bond auction in Madrid.

"The market doesn't know exactly what's going on. There are a lot of rumours ... Nobody knows exactly, which means that all options are possible at the moment," said BNP Paribas rate strategist Patrick Jacq.

Yields on German Bunds, the benchmark for euro zone borrowing costs which have over the past two weeks benefited from a renewed safe-haven bid on the Greek crisis, were 3 basis points down at 0.77 percent.

Greek 10-year yields were indicated lower at just below 13 percent.

EU diplomats denied late on Thursday a German newspaper report that Greece's creditors planned to offer to extend the country's existing aid programme until the end of this year, but without the IMF's participation.

A senior French diplomat said a deal must be struck in the next three days so that European leaders can make a decision when they meet at an extraordinary summit on Monday.

"It is not hard to argue that this game should have been put to an end months ago," said Jan von Gerich, chief fixed income analyst at Nordea.

"The fact that it has not illustrates the reluctance on both sides to throw in the towel, especially as both sides have used tactics that the other side has considered a humiliation."

Copyright Reuters, 2015

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parvezjabri@yahoo.com (Parvez Jabri) Europe Fri, 19 Jun 2015 07:59:41 +0000
German Bund futures open half a point higher http://www.brecorder.com/markets/fixed-income/europe/245510-german-bund-futures-open-half-a-point-higher.html http://www.brecorder.com/markets/fixed-income/europe/245510-german-bund-futures-open-half-a-point-higher.html imageLONDON: German Bund futures opened half a point higher on Friday as investors came back to bond markets after strong debt sales in Italy, Spain and Ireland on Thursday.

Yields have risen sharply across Europe in the past two months, with German 10-year Bund yields jumping from near zero to above 1 percent during that period.

The solid demand at the debt sales on Thursday gave the market a signal that many investors were eager to take advantage of the higher yields.

Bund futures opened 52 ticks higher at 150.91. The last traded 41 ticks higher at 150.80. Bund yields fell 3 basis points to 0.87 percent.

Italian BTP futures were 48 ticks lower at 131.37.

Copyright Reuters, 2015

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parvezjabri@yahoo.com (Parvez Jabri) Europe Fri, 12 Jun 2015 07:11:22 +0000
Ten-year gilts show strongest gains in eight weeks as IMF quits Greece talks http://www.brecorder.com/markets/fixed-income/europe/245484-ten-year-gilts-show-strongest-gains-in-eight-weeks-as-imf-quits-greece-talks.html http://www.brecorder.com/markets/fixed-income/europe/245484-ten-year-gilts-show-strongest-gains-in-eight-weeks-as-imf-quits-greece-talks.html imageLONDON: British 10-year gilts recorded their strongest one-day price gain in four weeks on Thursday, tracking German bond prices higher and pulling yields away from last week's six-month high after the IMF broke off talks with Greece.

Ten-year gilt yields dropped more than 7 basis points on the day to 2.05 percent by 1555 GMT, translating into the biggest rise in prices since April 14.

"Everything is in thrall to Bunds at the moment," said Marc Ostwald, fixed income strategist at ADM Investor Services International. Concerns about a lack of progress in Greece's discussions with the International Monetary Fund were again offering support to safe-haven bonds, he added.

The Fund raised the stakes in Greece's stalled debt talks on Thursday as its delegation broke off negotiations in Brussels and flew home because of major differences with Athens.

The surprise announcement came as the European Union told leftist Greek Prime Minister Alexis Tsipras to stop gambling with his cash-strapped country's future and take crucial decisions to avert a devastating default.

Thirty-year gilts also rallied strongly after solid demand at an auction of 2 billion pounds ($3.10 billion) of the bond by the UK Debt Management Office.

Some strategists had feared the sale might suffer from weak liquidity.

The 30-year bond sold at an average yield of 2.863 percent, and attracted bids worth 1.58 times the amount on offer, the highest demand in three months for a conventional British government bond.

DMO chief executive Robert Stheeman was reported on Monday as saying that a failed bond auction was a risk in Britain due to volatile prices and a lack of liquidity.

Ostwald said solid demand at the 30-year sale might not be repeated for other bonds, given the niche demand for long-dated British debt from domestic pension funds required to hedge against their long-term liabilities.

Ten-year gilts underperformed against Bunds -- as is common when Bunds lead a rally -- with the yield spread widening 2 basis points on the day to 116 basis points, after touching its narrowest since February on Wednesday.

There was little market reaction to speeches by finance minister George Osborne and Bank of England Governor Mark Carney late on Wednesday, with Carney steering clear of last year's comments on the outlook for monetary policy as he focused instead on the need to stamp out market malpractice.

Copyright Reuters, 2015

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Thu, 11 Jun 2015 20:13:02 +0000
UK gilt yields hit 11-day high after weak auction http://www.brecorder.com/markets/fixed-income/europe/244535-uk-gilt-yields-hit-11-day-high-after-weak-auction.html http://www.brecorder.com/markets/fixed-income/europe/244535-uk-gilt-yields-hit-11-day-high-after-weak-auction.html imageLONDON: British government bond prices fell after weak demand at the sale of 3.25 billion pounds ($4.95 billion) of 10-year gilts on Tuesday, pushing 10-year yields to their highest since May 22.

The UK Debt Management Office said investors bid for 1.19 times the 3.25 billion pounds of 2 percent 2025 gilts available, matching similarly weak demand at a sale on April 8, which showed the lowest investor appetite since March 2009.

Gilt futures fell to a session low and 10-year gilt yields rose more than 8 basis points on the day to peak at 1.937 percent at 0951 GMT.

Ten-year gilts' yield spread over Bunds widened by around 3 basis points after the auction result was published to touch 133 basis points.

Before the sale, Citi gilts strategist Jamie Searle had written in a note to clients that the auction had "clear negatives" as the gilt was expensive compared to others, though he expected other factors to offset this.

Gilt prices had also been put under pressure by Bank of England data showing a much bigger than expected jump in mortgage approvals in April.

Copyright Reuters, 2015

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imad_kueconomist@yahoo.com (Imaduddin) Europe Tue, 02 Jun 2015 12:21:16 +0000
Ten-year gilt yields hit 20-day low after soft GDP data http://www.brecorder.com/markets/fixed-income/europe/243869-ten-year-gilt-yields-hit-20-day-low-after-soft-gdp-data.html http://www.brecorder.com/markets/fixed-income/europe/243869-ten-year-gilt-yields-hit-20-day-low-after-soft-gdp-data.html imageLONDON: British government bonds rallied strongly on Thursday, taking 10-year yields to their lowest in nearly three weeks, following the release of first-quarter gross domestic product data which undershot economists' expectations.

The Office for National Statistics confirmed an earlier reading of 0.3 percent growth in the first quarter -- half the fourth quarter rate -- wrong-footing economists who had been forecasting a small upward revision.

Ten-year gilt yields hit 1.814 percent at 1053 GMT, their lowest since May 8 and more than 7 basis points down on the day. The gilts outperformed their German counterpart , narrowing their spread over German debt by around 4 basis points to 129.2 basis points.

Copyright Reuters, 2015

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imad_kueconomist@yahoo.com (Imaduddin) Europe Thu, 28 May 2015 12:21:20 +0000
German bond yields on track for first weekly fall in five weeks http://www.brecorder.com/markets/fixed-income/europe/243138-german-bond-yields-on-track-for-first-weekly-fall-in-five-weeks.html http://www.brecorder.com/markets/fixed-income/europe/243138-german-bond-yields-on-track-for-first-weekly-fall-in-five-weeks.html imageLONDON: German bond yields headed for their first weekly fall in five weeks on Friday as the market focused again on central banks' continued use of heavy stimulus, which is helping to bring stability after weeks of violent price swings.

The first fall in German business morale in seven months, albeit a shallower dip than forecast, supported demand for government bonds. Greece was the exception in the European bond market, as its yields rose after the latest talks with creditors failed to deliver any solution to its debt crisis.

But German 10-year yields, the benchmark for euro zone borrowing costs, led other euro zone bond yields down, steadying after a dramatic sell-off that has driven up Bund yields some 55 basis points from a record low of 0.05 percent in mid-April.

European Central Bank policymakers helped halt that sell-off earlier in the week, with Executive Board member Benoit Coeure saying the bank would accelerate its bond buying in the next six weeks, anticipating a decline in liquidity over the summer.

German 10-year yields were 3 basis points lower on the day at 0.60 percent, with French and other top-rated European bond yields down a similar amount. Italian and Spanish equivalents were steady to a touch lower on the day.

"We see some weaker data that may give a little bit of support to the ongoing QE and (the view) that there's still room left for more expansionary policy," said DZ Bank strategist Christian Lenk.

Copyright Reuters, 2015

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s.rs96@yahoo.com (Shoaib-ur-Rehman Siddiqui) Europe Fri, 22 May 2015 16:31:30 +0000
Euro bond yields rise as supply glut tests fragile market http://www.brecorder.com/markets/fixed-income/europe/242980-euro-bond-yields-rise-as-supply-glut-tests-fragile-market.html http://www.brecorder.com/markets/fixed-income/europe/242980-euro-bond-yields-rise-as-supply-glut-tests-fragile-market.html imageLONDON: Euro zone bond yields rose on Thursday as investors shaken by the market's recent selloff struggled to absorb more than 15 billion euros of new bonds from France and Spain.

Before the debt sales, yields were falling after Federal Reserve minutes showed late on Wednesday the U.S. central bank was in no hurry to raise interest rates. Focus then shifted to the European Central Bank's plan to accelerate asset purchases in May and June.

France sold almost 10 billion euros of fixed-rated and inflation-linked bonds while Spain auctioned 5.5 billion euros of short- and medium-term.

"The sell-off that we had means that some investors are very cautious of buying on dips, and that means, technically speaking, that they set a tighter stop than they normally would," said Mizuho strategist Peter Chatwell.

"Investors try not to take on as much risk and that means that the market acts in a more volatile manner."

German 10-year yields, the benchmark for euro zone borrowing costs, were up 3 basis points at 0.65 percent from the day's low of 0.60 percent. French and other top-rated euro zone bond yields were up a similar amount.

Spanish and Italian yields were 2 bps higher at 1.83 percent and 1.88 percent, respectively.

Preliminary surveys showing a recovery in French business activity in May also undermined demand for top-rated bonds, although the private sector in Germany -- the euro zone's biggest economy -- grew less than expected.

Data also showed that manufacturing activity in China and Japan remained sluggish in May, though lack of inflationary pressure suggested the authorities in Asia's top two economies could inject more stimulus if necessary.

Many analysts expect the market to remain jittery for the rest of the month. But they ruled out the kind of spike in yields seen recently, which has led some banks to raise their forecasts for German 10-year yields.

Increased coupon payments and bond redemptions in the coming month and the ECB's plans to ramp up asset purchases in May and June to offset thin liquidity this summer were expected to push yields lower.

"Next week, supply will be lighter and in June net supply will be negative, so conditions will be more supportive for the market," BNP Paribas strategist Patrick Jacq said.

"I see yields dragged down from these levels. The 10-year Bund yields could decline substantially but I don't expect a return back close to zero percent," he added.

Copyright Reuters, 2015

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imad_kueconomist@yahoo.com (Imaduddin) Europe Thu, 21 May 2015 12:06:27 +0000