- Return of supply comes ahead of ECB, Fed policy meetings
- Portugal's 10-year bond yield drops from three-week high
Portuguese government bonds advanced and led gains among euro-area peers after the country sold seven-year securities via banks, highlighting investor demand after an issuance lull during the summer months.
The gains pushed 10-year yields down from a three-week high. The 3 billion euros ($3.4 billion) of securities maturing in October 2022 were priced to yield 2.24 percent, according to a statement from Portugal’s debt agency on Wednesday. Spain is scheduled to sell debt securities maturing between 2020 and 2044 on Thursday.
The offering came a day before the European Central Bank holds a policy meeting in which officials may indicate whether they will respond to higher bond yields and lower commodity prices resulting from the turmoil in China, which might threaten their goal of achieving inflation of close to 2 percent.
Federal Reserve policy makers will later this month consider raising interest rates for the first time since 2006, which may have a knock-on effect on yields across the world.
“It’s a little bit hazardous in a certain sense because there’s a little bit of event risk coming up,” Marc Ostwald, a strategist at ADM Investor Services International in London, said before the results were announced. “If you are a sovereign you should have the confidence to launch a deal even when there is a lot of event risk around.”
Portugal’s 10-year yield fell five basis points, or 0.05 percentage point, to 2.68 percent as of 4:55 p.m. London time, after being at 2.76 percent, the most since Aug. 10. The 2.875 percent bond due in October 2025 rose 0.49, or 4.90 euros per 1,000-euro face amount, to 101.75.