JPMorgan Chase and Co. is boosting its holdings of Spanish bonds amid optimism the nation’s economy is recovering and as concerns ease that Greece will exit the euro.
The U.S. money manager, which oversees $1.7 trillion, said in a client note Friday that it’s selling eight-year German bunds and buying Spanish notes of the same maturity. A month ago, it reduced its exposure to the euro-zone periphery as Greece came close to being forced out of the currency union.
“Tail risks from Grexit have receded for now,” wrote Jan Loeys, chief market strategist at JPMorgan in New York. “We see upside for these trades from a positive macroeconomic backdrop and ECB QE support,” he wrote, referring to the European Central Bank’s quantitative-easing program.
The yield on Spain’s benchmark eight-year bond fell to 1.61 percent as of Friday’s close, from 1.94 percent at the start of July, while similar-maturity German securities yielded 0.5 percent.
Spain’s benchmark 10-year bond climbed for a 10th day on Monday, with the yield slipping three basis points, or 0.03 percentage point, to 1.90 percent as of 10:07 a.m. London time. The 1.6 percent security due in April 2025 advanced 0.275, or 2.75 euros per 1,000-euro ($1,085) face amount, to 97.31.