German government bonds rose before a report that may show euro-area services and manufacturing output dropped to a 39-month low in September.
Benchmark 10-year yields fell toward the lowest level in four weeks. Spanish two-year notes fell for the first time in three days after Prime Minister Mariano Rajoy said yesterday he has no plans to request a bailout soon. Portugal’s September 2013 securities were little changed as the nation’s debt agency prepared to offer to exchange the debt for bonds due in October 2015 as it tries to regain access to long-term debt markets.
“Concern over the economic outlook and Spain will continue to support demand for safe assets such as German bunds,” said Nick Stamenkovic, a fixed-income strategist at RIA Capital Markets in Edinburgh. “Rajoy yesterday damped hopes that the sovereign bailout will happen sooner rather than later.”
Germany’s 10-year yield declined two basis points, or 0.02 percentage point, to 1.43 percent at 7:23 a.m. London time. The rate reached 1.42 percent on Sept. 28, the least since Sept. 5. The 1.5 percent bond due September 2022 gained 0.195, or 1.95 euros per 1,000-euro ($1,289) face amount, to 100.59. The two- year note yield was at 0.04 percent.
A composite index based on a survey of purchasing managers in both industries in the 17-nation euro area fell to 45.9 in September, in line with an earlier estimate published on Sept. 20, according to the median forecast of 17 economists in a Bloomberg News survey.
Spain’s two-year note yield climbed three basis points to 3.18 percent, while the rate on similar-maturity Italian debt advanced one basis point to 2.22 percent.
European Central Bank policy makers will meet in Ljubljana, Slovenia tomorrow. All but three of 52 analysts surveyed by Bloomberg predict the central bank will keep its benchmark interest rate at a record-low 0.75 percent.
The yield on Portugal’s September 2013 bond was little changed at 3.60 percent.
The debt agency will offer to buy the debt maturing in September 2013 and will sell notes maturing in October 2015, the Lisbon-based IGCP said yesterday in a statement on its website. It plans to carry out the offer at 10:30 a.m. in Lisbon.
“The debt swaps in Portugal will be good for risk appetite,” said Peter Chatwell, a fixed-income strategist at Credit Agricole Corporate & Investment Bank in London. “We expect it to prove beneficial in generating some optimism, not just for Portugal but for other peripherals as well.”
German bunds have returned 3.2 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Spanish securities earned 1.6 percent and Portuguese bonds made 44 percent.
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