Italian and Spanish bonds pared declines as
the European Central Bank Executive Board was said to propose
expanding its stimulus to include buying 50 billion euros ($58
billion) a month in sovereign debt through the end of 2016.
The plan will be discussed today by the ECB’s Governing Council, which could still change the design significantly, according to two euro-area central-bank officials who have seen the document. Policy makers are set to meet in Frankfurt on Thursday. The ECB declined to comment. Member Ewald Nowotny said at a Euromoney conference in Vienna that bankers should not get carried away by one meeting and instead “have a longer-term view.”
“The market’s reaction suggests it was expecting something big from the ECB,” said Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen. “Expectations were fairly high for the meeting. If it is 50 billion euros, it would be a positive surprise and I think you would see more market impact if the number is confirmed.”
Italy’s 10-year yield rose three basis points, or 0.03 percentage point, to 1.71 percent as of 4:08 p.m. London time after earlier climbing as much as eight basis points. The 2.5 percent bond due in December 2024 fell 0.315, or 3.15 euros per 1,000-euro face amount, to 107.25.
Spain’s 10-year rate increased two basis points to 1.54 percent and the yield on similar-maturity German bunds added seven basis points to 0.52 percent.
Rates across the euro area have tumbled since ECB President Draghi pledged in July 2012 to do whatever it takes to save the euro. The average yield on euro-area government debt dropped to 0.7017 percent on Jan. 19, the least since at least 1995, according to Bank of America Merrill Lynch indexes.
Germany sold five-year debt at the lowest auction yield on record. It allotted 4 billion euros of zero-coupon notes due in April 2020 at an average yield of 0.04 percent. That’s the lowest rate since Bloomberg began collecting the data in 1993. The German Finance Agency previously sold five-year debt on Dec. 3 at an average yield of 0.14 percent.
The bonds of Europe’s largest economy maturing in four years or earlier all currently yield less than zero. The rate on German two-year securities was little changed at minus 0.166 percent, having touched a record minus 0.176 percent on Jan. 19.
A negative yield means investors buying the securities will get less back when the debt matures than they paid.
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net
To contact the editors responsible for this story: Paul Dobson at pdobson2@bloomberg.net Todd White, Mark McCord
The plan will be discussed today by the ECB’s Governing Council, which could still change the design significantly, according to two euro-area central-bank officials who have seen the document. Policy makers are set to meet in Frankfurt on Thursday. The ECB declined to comment. Member Ewald Nowotny said at a Euromoney conference in Vienna that bankers should not get carried away by one meeting and instead “have a longer-term view.”
“The market’s reaction suggests it was expecting something big from the ECB,” said Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen. “Expectations were fairly high for the meeting. If it is 50 billion euros, it would be a positive surprise and I think you would see more market impact if the number is confirmed.”
Italy’s 10-year yield rose three basis points, or 0.03 percentage point, to 1.71 percent as of 4:08 p.m. London time after earlier climbing as much as eight basis points. The 2.5 percent bond due in December 2024 fell 0.315, or 3.15 euros per 1,000-euro face amount, to 107.25.
Spain’s 10-year rate increased two basis points to 1.54 percent and the yield on similar-maturity German bunds added seven basis points to 0.52 percent.
Rates across the euro area have tumbled since ECB President Draghi pledged in July 2012 to do whatever it takes to save the euro. The average yield on euro-area government debt dropped to 0.7017 percent on Jan. 19, the least since at least 1995, according to Bank of America Merrill Lynch indexes.
German Auction
In a Bloomberg News survey, 93 percent of respondents said they expect ECB President Mario Draghi will announce a bond-purchase program on Jan. 22. The median forecast was for a target of 550 billion euros.Germany sold five-year debt at the lowest auction yield on record. It allotted 4 billion euros of zero-coupon notes due in April 2020 at an average yield of 0.04 percent. That’s the lowest rate since Bloomberg began collecting the data in 1993. The German Finance Agency previously sold five-year debt on Dec. 3 at an average yield of 0.14 percent.
The bonds of Europe’s largest economy maturing in four years or earlier all currently yield less than zero. The rate on German two-year securities was little changed at minus 0.166 percent, having touched a record minus 0.176 percent on Jan. 19.
A negative yield means investors buying the securities will get less back when the debt matures than they paid.
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net
To contact the editors responsible for this story: Paul Dobson at pdobson2@bloomberg.net Todd White, Mark McCord
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