German bunds pared a decline and Italian securities dropped after European Central Bank President Mario Draghi said monetary policy can’t make up for a “lack of action” by other institutions to tackle the debt crisis.
Spanish 10-year government securities erased gains after Draghi said the ECB will extend its offering of unlimited cash for periods up to three months until the start of 2013, while indicating longer-term financing will have to wait. The ECB left its benchmark interest rate at 1 percent today, as predicted by most economists in a Bloomberg News survey. Draghi also said the region’s economic outlook was subject to “increased downside risks.”
German 10-year yields rose three basis point, or 0.03 percentage point, to 1.24 percent at 2:14 p.m. London time. They earlier rose as much as seven basis points, the biggest increase since April 11. The 1.75 percent securities due in July 2022 dropped 0.29, or 2.90 euros per 1,000-euro ($1,246) face amount, to 104.82.
Spanish 10-year yields were little changed at 6.31 percent, after earlier falling as much as seven basis points to 6.24 percent. The rate on similar-maturity Italian debt was three basis points higher at 5.68 percent. It dropped as much as six basis points intraday to touch 5.59 percent.
“I don’t think it would be right for the ECB to fill other institutions’ lack of action,” Draghi said at a press conference in Frankfurt. “We monitor all developments and we stand ready to act.”
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