Spanish Debt Declines on Supply Plans as German Bunds Erase Gain

Spanish (GSPG10YR) government bonds declined, with 10-year yields extending their first monthly increase since August, as the nation announced it was selling bonds due between 2015 and 2023 next week.

German 10-year bunds erased an advance after the MNI Chicago Report’s business barometer rose more than expected in May. Fixed-income assets around the world have tumbled the most in almost a decade this month amid speculation the Federal Reserve may start to taper its bond-buying stimulus program. Italian government securities also dropped after a report showed the euro-area unemployment rate increased to a record in April.

“Spain has auctions next week and that is probably weighing on the bonds,” said Luca Cazzulani, a senior fixed-income strategist at UniCredit SpA (UCG) in Milan. “The data has also contributed to creating some pressure. Investors are thinking about whether the Fed will taper its stimulus and that is bad for all higher-yielding euro-region assets.”

Spanish 10-year bond yields climbed seven basis points, or 0.07 percentage point, to 4.44 percent at 4 p.m. London time. The rate has climbed 30 basis points since April 30. The 5.4 percent bond due January 2023 fell 0.56, or 5.60 euros per 1,000-euro ($1,297) face amount, to 107.42. The rate on similar-maturity Italian debt rose three basis points to 4.15 percent.

The MNI Chicago Report’s business barometer rose to 58.7, exceeding all forecasts in a Bloomberg survey and the highest since March 2012, from 49 in April. A reading greater than 50 signals expansion. The median estimate of 54 economists surveyed was 50.

German Bunds

Germany’s 10-year yield was little changed at 1.52 percent after earlier dropping six basis points to 1.45 percent.

The jobless rate in the euro region rose to 12.2 percent last month from 12.1 percent in March, the European Union’s statistics office in Luxembourg said today, in line with the median forecast of 37 analysts in a Bloomberg News survey.

Separate data showed consumer-price inflation in the euro area accelerated this month. The annualized rate climbed to 1.4 percent in May from a month earlier, when it was 1.2 percent, the least since February 2010.

Volatility on Greek bonds was the highest in euro-area markets today followed by those of Belgium and France, according to measures of 10-year debt, the yield spread between two- and 10-year securities, and credit-default swaps.

German government bonds handed investors a loss of 1.5 percent this month through yesterday, poised for the worst month since January, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies.

Securities in the Bank of America Merrill Lynch Global Broad Market Index fell 1.4 percent through May 30, poised for the steepest loss since April 2004.

To contact the reporters on this story: David Goodman in London at dgoodman28@bloomberg.net; 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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