Bond prices are on the rise

Bond transactions in Greece’s secondary bond market (HDAT) rose to 56.21 billion euros in May from 51.21 billion in May 2002, according to data published yesterday by the Bank of Greece. Most of the transactions – about 67 percent – were in medium-length and long-term bonds. The most popular bonds were the 10-year bond maturing on May 18, 2012 and the 10-year benchmark bond, whose transaction volumes were 9.26 billion and 8.04 billion euros, respectively. Of the 10,004 transaction orders fed into HDAT, 51.52 percent were «buy» orders and 48.48 percent «sell» orders. The liquidity of the 10-year benchmark bond, calculated as the ratio of transaction volume over the value of the titles in circulation, was 161 percent in May, up from 106 percent the previous month. Prices in all bonds rose between 113 and 589 basis points (1.13 to 5.89 percent). The top gainer was the 20-year bond maturing on October 22, 2022, whose price at the end of May was 117.13, up from 111.24 at the end of April. The yield fell to 4.55 percent, from 4.98 percent at end-April. The price of the 10-year benchmark bond, maturing on May 20, 2013, rose to 106.28 from 102.27, while its yield fell to 3.82 percent from 4.31 percent. Its spread with the German benchmark bond fell to 18 basis points (0.18 percent) from 20 b.p. in April. With the Athens Stock Exchange also on the rise, Greek investors, like their global counterparts, are going through a «dream period» where stocks, bonds, and gold are all on the rise. This period started at the end of March and has concerned market professionals as this is not the way things are supposed to work. They consider that this simultaneous rise means an inability on the part of the markets to forge a certain trend due to conflicting economic messages.

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