German Bunds Snap Three-Day Advance Before Italian Debt Sale

German 10-year bonds snapped a three-day advance as Italy prepared to sell as much as 6 billion euros ($7.95 billion) of government debt.

Benchmark 10-year yields dropped to a two-week low yesterday amid concern U.S. lawmakers won’t reach an agreement on budget negotiations in time to stop more than $600 billion in tax increases and spending cuts for 2013 starting to take effect in January. Italy plans to auction five- and 10-year securities.

German 10-year yields rose one basis point, or 0.01 percentage point, to 1.32 percent at 7:14 a.m. London time. The rate fell to 1.31 percent yesterday, the lowest since Dec. 13. The 1.5 percent bond maturing in September 2022 dropped 0.065, or 65 euro cents per 1,000-euro face amount, to 101.60.

The Italian Treasury last sold 10-year bonds on Nov. 29 at an average yield of 4.45 percent. It auctioned five-year notes at 3.23 percent the same day.

German bonds returned 4.4 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Italian bonds earned 21 percent.

To contact the reporter on this story: Emma Charlton in London at echarlton1@bloomberg.net

To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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