German government bonds advanced, pushing 10-year yields below 1.50 percent for the first time since June, as stocks slumped after JPMorgan Chase & Co. said first-quarter profit declined more than forecast.
Italy’s bonds dropped for the first time in three days as investors bet a rally that pushed the nation’s 10-year yield to a record low this week was overdone. Greek securities declined for a second day after the nation returned to debt markets yesterday. Portugal’s 10-year bonds fell even after Fitch Ratings raised the country’s outlook to positive from negative, citing “good progress” in reducing its budget deficit.
“In the overall risk-off pattern with equities under pressure, peripherals under pressure, we’re basically just seeing bunds grind higher and higher,” said Michael Leister, a senior fixed-income strategist at Commerzbank AG in London. “There might be some profit-taking going on in the peripherals. With yields printing new multi-year and all-time lows, that was to be expected. We don’t think this will mark the end of the rally, particularly for Spain and Italy.”
Benchmark 10-year bund yields fell one basis point, or 0.01 percentage point, to 1.51 percent at 4:18 p.m. London time after sliding to 1.49 percent, the lowest since June 7. The 1.75 percent bond due February 2024 rose 0.07, or 70 euro cents per 1,000-euro ($1,389) face amount, to 102.15.
JPMorgan, the biggest U.S. bank, said profit in the three months through March slid 19 percent on lower revenue from fixed-income trading and mortgages. The Stoxx Europe 600 Index of shares declined 1.7 percent while Standard & Poor’s 500 Index futures expiring in June fell 0.5 percent.
Italy’s 10-year yield rose five basis points to 3.21 percent. The rate dropped to 3.14 percent on April 7, the lowest level since Bloomberg started collecting the data in 1993.
Italy sold a combined 7.2 billion euros of debt due in 2016, 2021 and 2044 today. The Rome-based Treasury allotted 1.2 billion euros of 30-year debt at an average yield of 4.27 percent, the lowest since February 2006, compared with 4.59 percent at a previous auction on Feb. 13.
Italy also sold 3.5 billion euros of notes maturing in December 2016 at 0.93 percent and 2.5 billion euros of bonds due in May 2021 at 2.44 percent. The nation’s 30-year bond yield increased three basis points to 4.29 percent.
DBRS Ltd. may announce rating reviews for Italy, Spain and Germany after the market closes today.
Greek 10-year yields climbed 35 basis points to 6.29 percent after declining to 5.80 percent on April 9, the lowest since February 2010. The rate on 10-year Portuguese debt rose nine basis points to 3.96 percent.
Greece sold 3 billion euros of notes due in April 2019 through banks yesterday at an average yield of 4.95 percent.
The nation received about 600 orders from investors, for a total of around 20 billion euros, a person familiar with the sale said yesterday. Hedge funds bought 33 percent of the debt, while asset managers purchased 49 percent, the Finance Ministry said in e-mailed statement yesterday.
Volatility on Italian bonds was the highest in euro-area markets today, followed by those of Portugal and Greece, according to measures of 10-year debt, the yield spread between two- and 10-year securities and credit-default swaps.
The average yield to maturity on bonds from Greece, Ireland, Italy, Portugal and Spain fell to 2.24 percent yesterday, the lowest in the history of the currency bloc, according to Bank of America Merrill Lynch indexes. The rate climbed to as high as 9.55 percent in 2011.
Germany’s returned 2.8 percent this year through yesterday, according to Bloomberg World Bond Indexes. Greece’s gained the most, earning 32 percent, while Italy’s advanced 6.1 percent.