Friday, October 19, 2012

Bonds: Spanish messages turned the picture

Bond dealers were almost gone for the weekend before Friday's trade. In any case, there were close to absolute rest on a trading day, which was marked by cautious buying almost across the board.

This resulted in a slight decline in interest rates in both South and North Europe most of the day, but new reports that Spain has not intend to seek official help for its pressed banking sector reversed the picture in Spain and Italy, which ended with small increases in interest rates.

The EU summit in Brussels, which ended Friday, did not contain much new about either Spain or Greece, but the theme was rather the common European banking supervision, where politicians have moved plans a bit and have agreed that there should now be "consensus" on the Supervision before New Year against the previous plan, the creation process they were "closed" at the New Year. Thus are, disputes about the timing - if nothing else - temporarily put on ice.

The yield on the benchmark German government bond went on weekend at 1.61 percent after a fall of one basis point.

In southern Europe decreases were slightly higher at midday on Friday, but after statements fom Prime Minister of Spain, Mariano Rajoy, that he by no means will succumb to pressure from others to seek help, the picture changed. Thus closed the Spanish, ten-year interest rate with an increase of three basis points to 5.35 percent, while the yield on Italian government bonds with ten years maturity fell by one basis point - to 4.76 percent.

From the United States came yet another indication of the housing market in September's statistics on existing home sales. Sales fell quite as expected to 4.75 million homes, and the figure failed properly to move the market.

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