German 10-year government bonds declined for a third day after a report showed business confidence in the euro area’s largest economy improved for a second month in December, damping demand for the safest assets.
The drop pushed the benchmark bund yield to the highest level in more than two weeks. Greek 10-year bond yields reached the lowest since the nation’s debt was restructured in March after Standard & Poor’s raised the country’s credit rating on Tuesday. Italian 10-year securities advanced for a fourth day as European stocks rose.
“The latest print from the Ifo was a bit better than expected and indicates there might be a stabilization,” said Morten Hassing Povlsen, a senior rates analyst at Nordea Bank AB in Copenhagen. “The market has taken the Ifo data with relief, because it isn’t dropping more. Bund yields are rising toward the late November highs.”
German 10-year yields rose one basis point, or 0.01 percentage point, to 1.42 percent at 10:42 a.m. London time, after climbing to 1.44 percent, the highest since Dec. 3. The 1.5 percent bond maturing in September 2022 dropped 0.12, or 1.20 euros per 1,000-euro ($1,324) face amount, to 100.68.
Italian 10-year bond yields fell four basis points to 4.41 percent after dropping to 4.39 percent, the least since Dec. 4.
The Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 102.4 from 101.4 in November. That’s the second straight increase after sentiment dropped to a 2 1/2 year low in October. Economists predicted a gain to 102, according to the median forecast of 43 economists in a Bloomberg News survey.
S&P raised Greece’s rating to B- with a stable outlook from selective default after a sovereign-debt buyback, citing the “strong determination” of euro-area governments to keep the nation in the currency bloc.
“The stable outlook balances our view of euro-zone member states’ determination to support Greece’s euro-zone membership and the Greek government’s commitment to a fiscal and structural adjustment,” the ratings company said.
Yields on 10-year Greek bonds dropped 60 basis points to 12.22 percent, the lowest since the debt was restructured.
German bunds returned 3.8 percent this year through Tuesday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Italian bonds added 21 percent.