LONDON: Spanish and Italian government bonds yields fell on Wednesday, widening the spread over German debt as sentiment towards lower-rated euro zone debt improved.
The Spanish 10-year yield was 9 basis points lower on the day at 5.43 percent while the Italian equivalent dropped 10 bps to 7.04 percent. German 10-year yields were flat on the day at 1.885 percent.
"It is a little bit of ongoing with the spread tightening following the Fitch comments yesterday that Austria's (ratings) is not at immediate risk and also France's -- that's given a little bit of a bullish tone to the periphery," one trader said.
"We've got a five-year German auction as well and that's putting a bit of pressure on Germany. We have Spain and Italy (auctions on Thursday and Friday) so I wouldn't be surprised to see a little bit of pressure on Spain after the German auction."
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