Spain’s government bonds advanced for the first time in five days as contagion from a rout in emerging-market assets eased.
Portuguese securities rallied after last week’s drop, when developing-economy stocks and currencies declined on concern global growth will be threatened by a reduction in Federal Reserve stimulus. Greek bonds extended their losses from last week. German 10-year yields rose from near the lowest level since August as a report showing business confidence climbed damped demand for haven assets.
“The selloff last week wasn’t anything to do with euro-zone issues, it was a wider trend in the market,” said Padhraic Garvey, head of developed-market debt at ING Bank NV in Amsterdam. “Investors will take the pain for now and at the margin I’d expect investors to be buying back into the periphery,” he said, referring to the region’s nations with the highest debt and deficits.
Spain’s 10-year bond yield fell four basis points, or 0.04 percentage point, to 3.76 percent at 4:43 p.m. London time after climbing nine basis points last week, the most since the five-day period ended Nov. 8. The 4.4 percent bond maturing October 2023 rose 0.325, or 3.25 euros per 1,000-euro ($1,368) face amount, to 105.155.
Portugal’s 10-year yield fell 10 basis points to 5.17 percent. Italy’s slipped one basis point to 3.90 percent after rising to 3.95 percent, the highest since Jan. 7.
Volatility on Finnish bonds was the highest in the euro-area markets today, followed by those of Spain (GSPG10YR) and Austria, according to measures of 10-year debt, the yield spread between two- and 10-year securities and credit-default swaps.
Emerging-market stocks have had the worst start to a year since 2009 and currencies from Turkey to South Korea tumbled amid signs growth is slowing in developing nations as the Fed prepares to review further stimulus cuts this week.
While the selloff in emerging-market currencies was tempered today as Turkey’s lira appreciated on speculation the central bank will raise interest rates, South Africa’s rand weakened for a fourth day and Brazil’s real declined.
Greek 10-year yields increased 11 basis points to 8.56 percent, after rising 60 basis points last week, the most since August. The rate on Slovenia’s 4.625 percent bonds due in September 2024 fell three basis points to 4.90 percent, after climbing 25 basis points on Jan. 24, the most since April 10.
The Ifo institute’s German business climate index, based on a survey of 7,000 executives, climbed to 110.6 in January from 109.5 in December. Economists predicted an increase to 110, according to the median of 45 estimates in a Bloomberg News survey. It was the third consecutive advance and the strongest reading since July 2011.
Benchmark German 10-year bund yields were little changed at 1.67 percent after dropping to 1.64 percent on Jan. 24, the lowest since Aug. 5.
Spain’s bonds earned 2.2 percent this year through Jan. 24, Bloomberg World Bond Indexes show. Italy’s gained 1.2 percent while German securities returned 1.5 percent.