Italy’s 10-year bonds rose, pushing yields down from a three-month high, as the nation prepared for its first bond auction since inconclusive election results renewed concern Europe’s sovereign-debt crisis will deepen.
Italian 10-year securities pared a monthly decline as nation prepared to sell as much as 4 billion euros ($5.23 billion) of new 10-year bonds and 2.5 billion euros of five-year notes. Spanish bonds also gained before a report that analysts said will show euro-area economic confidence increased to the highest level in eight months in February. Germany’s 10-year yields reached an eight-week low.
“The market is going to focus on the Italian auctions after the election,” said Niels From, chief analyst at Nordea Bank AB in Copenhagen. “There is a lot of uncertainty and we may be facing another election. There’s a risk of yields moving higher. The longer it takes to create political certainty in Italy, the higher the risk will be.”
Italy’s 10-year yield fell four basis points, or 0.04 percentage point, to 4.86 percent at 9:10 a.m. London time, after rising to 4.96 percent, the highest level since Nov. 15. The 5.5 percent bond due November 2022 gained 0.265, or 2.65 euros per 1,000-euro face amount, to 105.315.
The rate jumped as much as 44 basis points yesterday, the biggest increase since Dec. 19, 2011, and has climbed 55 basis- point this month.
Italian 10-year bonds tumbled yesterday as results showed pre-election favorite Pier Luigi Bersani won the lower house by less than a half a percentage point, while Silvio Berlusconi, the former premier fighting a tax-fraud conviction, gained a blocking minority in the Senate.
The Rome-based Treasury last auctioned 10-year bonds on Jan. 30 at an average yield of 4.17 percent. The same day, it sold securities maturing in November 2017 at 2.94 percent.
Spain’s 10-year yield dropped three basis points to 5.33 percent after climbing 20 basis points yesterday.
An index of economic confidence in the currency bloc rose to 89.9 from 89.2 in January, according to the median forecast of 29 analysts in a Bloomberg News survey.
Germany’s 10-year bund yield was little changed at 1.45 percent after reaching 1.44 percent, the least since Jan. 3.
German government bonds handed investors a loss of 0.5 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Italian debt dropped 1.3 percent, while Spanish securities returned 1.3 percent, the indexes show.