Turkish bond yields rose the most in more than a week after the European Central Bank disappointed investors seeking more definitive measures to contain the euro region’s debt crisis. The lira gained against the euro.
Yields on benchmark two-year government debt climbed for the first time in four days, increasing seven basis points, or 0.07 percentage point, to 7.67 percent, the biggest jump since July 24, at the close in Istanbul. The lira appreciated 0.9 percent to 2.1916 per euro, the strongest since April 2011.
President Mario Draghi signaled today the ECB will join forces with governments to buy sovereign bonds in sufficient quantities to remove all doubts about the euro, with details to be fleshed out in coming weeks. His comments come a week after he pledged to do “whatever it takes” within the ECB’s mandate to save the currency bloc. The European Union nations buys 37.1 percent of Turkish exports.
“The market clearly doesn’t like the uncertain scenario as policy makers seem to be borrowing more and more time whilst last week’s comments suggested that a ‘done deal’ could have been presented today,” Matthew Rome, a trader at Newedge USA LLC in Chicago, said in an e-mailed note.
Draghi’s remarks last week were interpreted by most as a signal the ECB will intervene in bond markets, forcing down Spanish and Italian yields.
The euro initially climbed as much as 0.5 percent to $1.2405 after Draghi’s comments before falling to as low as $1.2174. The yield on Italy’s 10-year government bond rose 23 basis point to 6.129 percent and the yield on Spain’s 10-year bond climbed 7 basis points to 6.716 percent. European and U.S. stocks retreated.