Sweden’s two-year yield topped 1 percent for the first time since August as the nation’s haven status faded on optimism European leaders have contained the sovereign debt crisis.
Two-year yields gained as much five basis points to 1.00 percent, reaching that level for the first time since Aug. 21. The spread, or difference in yield, to similar-maturity benchmark German bonds was little changed at 76 basis points.
“Decreasing risk internationally has meant foreign investors have decreased their holdings of Swedish government bonds,” Roland Nilsson, fixed-income strategist at Swedbank AB, said by telephone today.
Nordic bond yields have surged this year as investors grow more comfortable investing in debt sold by struggling southern European nations. Spain’s two-year yield has slid 43 basis points this year to 2.55 percent, while Italy’s two-year yield has dropped 58 basis points to 1.41 percent.
German two-year yields climbed today to the highest since April, extending increases from yesterday amid speculation financial institutions will begin paying back loans from the European Central Bank, pushing up overnight borrowing rates. Reports showing economic growth in China exceeded economist estimates also damped demand for the safest government debt.
Sweden has managed to sustain economic growth even as exports slump. The Swedish Riksbank last month lowered its benchmark rate to 1 percent to protect the economy and signaled it won’t cut rates further.
Swedish bonds have lost 1.15 percent this year, according to a broad market Bloomberg/EFFAS index.