Southern European states’ bond yields continue decline

Spain’s bond yields dropped to an eight-year low and Italian and Greek government securities rallied on Wednesday as evidence mounted the euro-area economy is improving before the European Central Bank meets on Thursday.

Spain’s 10-year yield fell nine basis points, or 0.09 percentage point, to 3.35 percent, the lowest since January 2006.

Similar-maturity Italian yields declined five basis points to 3.37 percent after reaching 3.36 percent, the lowest since October 2005.

Portugal’s 10-year yields slid 13 bps to 4.71 percent and Greece’s fell 12 bps to 6.81 percent.

Spanish and Italian 10-year borrowing costs have both dropped below 4 percent this year for the first time since 2010 with investors emboldened by what ECB President Mario Draghi said last month was “remarkable progress in gaining competitiveness.”

Portuguese and Greek bond rates have also declined as the nations move toward exiting bailout programs introduced at the height of the regions’ debt crisis.