With euro-area finance ministers searching for an agreement to unlock rescue aid for Greece, Spanish and Italian government bonds signal there’s no panic. At least for now.
Spain’s 10-year securities headed for their first weekly advance since the period ended April 3. Greek bonds held gains that pushed yields on three-year notes to the lowest level in a week. The region’s finance ministers meet in Riga, Latvia, on Friday, with still no solution to the impasse between Greece’s Prime Minister Alexis Tsipras and creditors demanding economic reforms to release funding.
“The headlines on Greece have turned from desperate to hopeful in the past few days, which has certainly helped Greek bonds to recover from highly depressed levels,” said Christoph Rieger, head of fixed-rate strategy at Commerzbank AG in Frankfurt. “This has been sufficient to also lift sentiment somewhat in the peripheral bond markets in general.”
Spain’s 10-year yields were little changed at 1.36 percent as of 9:31 a.m. London time. The yield is down 10 basis points, or 0.1 percentage point, this week. The price of the 1.6 percent bond due in April 2025 was 102.26 percent of face value.
The extra yield, or spread, that investors get for holding the securities instead of similar-maturity German bunds shrank 19 basis points this week to 119 basis points. That’s the biggest decline since the period ended Feb. 27.
The yield on Greece’s 3.375 percent note due in July 2017 dropped 49 basis points to 24.38 percent, after earlier touching 23.67 percent, the least since April 16. The 10-year yield fell 11 basis points to 12.19 percent.
Germany’s bonds, the euro area’s benchmark sovereign securities, were little changed on Friday even as a report showed business confidence in Europe’s biggest economy jumped to a 10-month high in April.
The Ifo institute’s business-climate index rose to 108.6 from 107.9 in March. The median estimate was for an increase to 108.4, according to a Bloomberg survey of economists.
German 10-year yields were at 0.17 percent, up from 0.08 percent at the end of last week.