Bloomberg News

Bund Yields Climb to One-Month High After Manufacturing Expands

January 24, 2012

Jan. 24 (Bloomberg) -- German bunds fell, pushing 10-year yields to the highest in a month, as a euro-area report showing services and manufacturing output unexpectedly expanded in January damped demand for the region’s safest securities.

Greek two-year notes gained and five-year debt fell as talks between the nation and its private creditors reached an impasse and Luxembourg Prime Minister Jean-Claude Juncker said the program was “off track.” The Netherlands sold debt due in 2013 and 2042 today, while Spain auctioned bills.

The German 10-year yield climbed one basis point, or 0.01 percentage point, to 1.98 percent at 9:51 a.m. London time after reaching 2 percent, the highest since Dec. 21. The 2 percent bund due in January 2022 fell 0.095, or 95 euro cents per 1,000- euro ($1,303) face amount, to 100.155.

Greece’s two-year yield dropped 967 basis points to 166.33 percent, and the price rose 1.32 to 23.06 percent of face value. The five-year yield climbed 428 basis points to 58.2 percent.

A euro-area composite index based on a survey of purchasing managers in the services and manufacturing industries jumped to 50.4 from 48.3 in December, according to initial estimates. Economists surveyed by Bloomberg forecast a reading of 48.5. A number below 50 indicates contraction.

Bunds have handed investors a 0.9 percent loss this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. French government bonds have declined 0.1 percent and Greek debt lost 0.2 percent, the indexes show.

--Editors: Nicholas Reynolds

To contact the reporters on this story: Lucy Meakin in London at lmeakin1@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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