Bond Volatility Plunging as Euro Region Rallies on Greece

With the risk that Greece falls out of the euro bloc contained for now, the region’s government bond markets may look forward to a week devoid of violent fluctuations.

Volatility in the region’s benchmark bonds approached the lowest level since early June after Greece reached agreement with creditors for a bridge loan. In the past week’s flurry of activity, lawmakers in the nation approved austerity measures and the European Central Bank increased its emergency aid to Greek banks. Yields on Italian and Spanish bonds saw their biggest weekly declines in almost four months as investors recycled cash they received from interest and debt repayments.