German 10-year government bonds declined for a second day as further signs of improvement in the U.S. economy curbed demand for the safest European assets.
Bund yields reached a two-month high after data showed companies in the U.S. added more workers in December than economists forecast. French bond rates rose even as borrowing costs fell to a record low at a sale of 10-year securities. Dutch and Finnish government bonds also dropped along with Belgian debt, which slid amid speculation the nation’s debt agency will issue a new 10-year syndicated security this month.
“The market is in the mood to take the numbers that we see out of the U.S. as a positive and this reinforces the move lower in bunds,” said Christian Lenk, an analyst at DZ Bank AG in Frankfurt. “Investors are returning after year-end and there is a lot of capital flowing into risky assets and out of safe- havens like bunds.”
The benchmark 10-year German yield rose four basis points, or 0.04 percentage point, to 1.48 percent at 5 p.m. London time, the highest since Nov. 2. It added 13 basis points yesterday, the steepest increase since Sept. 14. The 1.5 percent bond maturing September 2022 fell 0.33, or 3.30 euros per 1,000-euro ($1,311) face amount, to 100.18.
The 215,000 increase in American employment was the largest since February and followed a revised 148,000 gain the prior month that was larger than initially reported, figures from the Roseland, New Jersey-based ADP Research Institute showed today. The median forecast of 36 economists surveyed by Bloomberg called for a December advance of 140,000.
U.S. consumer sentiment last week reached an eight-month high and the Bloomberg Consumer Comfort Index rose to minus 31.8 in the period ended Dec. 30, its highest since April, from minus 32.1 a week earlier.
Volatility on Belgian debt was the highest among euro-area nations tracked by Bloomberg, followed by that of Portugal and the Netherlands, according to measures of 10-year bonds, two- and 10-year yield spreads and credit-default swaps.
“There are rumors that Belgium will issue a new 10-year soon and that might explain the move in Belgian bonds,” said Piet Lammens, head of research at KBC Bank NV in Brussels.
France sold 3.53 billion euros of bonds maturing in October 2022 at an average yield of 2.07 percent, compared with 2.22 percent at the previous auction of the securities on Oct. 31. It also auctioned debt due in October 2019, April 2020 and October 2032.
Yields on French 10-year debt rose four basis points to 2.12 percent.
The rate on similar maturity Italian securities declined four basis points to 4.23 percent. Italy’s two-year yield fell eight basis points to 1.67 percent after losing 26 basis points yesterday, the steepest decline since Sept. 4.
German bonds returned 4.1 percent over the past year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. French securities earned 10 percent, while Italian debt gained 21 percent.
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