ECONOMY

Eurozone bond yields fall as ECB buying isolates Greek crunch

Euro zone government bond yields fell on Friday, with the European Central Bank’s bond buying splurge reducing Greece’s cash crunch to a sideshow for the moment.

Greek Prime Minister Alexis Tsipras assured European Union creditors at late-night crisis talks in Brussels that his leftist-led coalition would soon present a full set of economic reforms in order to unlock cash to stave off bankruptcy.

While the joint statement by the EU institutions spoke of a «spirit of mutual trust,» German Chancellor Angela Merkel stressed no money would be released before Athens implements budget measures and other reforms.

Greece is running out of time to secure new funding and many fear the current impasse risks seeing Athens crashing out of the euro zone.

But a second week of ECB bond buying insulated other euro zone countries. Spanish and Italian 10-year bond yields were down 3 basis points each, both trading at 1.22 percent.

The one trillion euro quantitative programme ends in September 2016.

“Greece remains a localised issue because the ECB is buying so many bonds,» said Nick Stamenkovic, bond strategist at RIA Capital Markets. «ECB QE remains the main driver.”

Portuguese 10-year bond yields fell 4 bps to 1.68 percent. At the top of the credit rating scale, German Bund yields dipped 1 bps to 0.18 percent.

All bond yields were near record lows.

[Reuters]