German bund yields were on track for their biggest weekly rise of 2015 on Friday as fears of an imminent Greek default eased, though strategists still saw European Central Bank bond buying as a powerful driver in the opposite direction.
Greece offered concessions on Friday on some key reforms demanded by international lenders in exchange for new funding, with Athens’s coffers emptying rapidly.
Athens looks likely to be able to scrape together enough cash to meet its payment obligations into June after it ordered various state entities to park idle cash with the central bank earlier this week.
This has encouraged investors to sell top-rated bunds and buy higher-yielding debt from peripheral euro economies, traders said, but mixed economic data has provided some restraint.
“This week’s rise has been driven by developments in Greece,” said Christian Lenk, rate strategist at DZ Bank.
“This week’s moves are more of a correction than a trend,” said Nick Stamenkovic, bond strategist at RIA Capital Markets.
Greek 10-year yields nudged up on Friday to 12.69 percent but were down over 30 bps on the week as investors breathed a sigh of relief that Athens’s cash crunch would be delayed at least until the start of summer.
“The worst-case scenario has been put off for now,” added Stamenkovic.
“So far, the markets are giving Greece the benefit of the doubt.”