Spanish government bonds dropped for a third day after a report showed China’s economic growth unexpectedly slowed in the first quarter, damping demand for Europe’s higher-yielding assets.
Spain’s 10-year bonds led declines as the nation prepared to auction debt due between 2016 and 2023 on April 18. Italian securities also fell even as the Treasury said demand for an inflation-linked bond aimed at retail investors has exceeded the amount sold in the first day of the previous sale. European stocks retreated, following their biggest weekly gain in a month. German 10-year bunds rose, pushing the yield toward an eight-month low.
“After the weaker-than-expected Chinese growth data, risk- off was the prevalent theme,” said Richard McGuire, a senior fixed-income strategist at Rabobank International in London. “That has seemingly continued in European equity markets. There also maybe some concession building ahead of this week’s supply from Spain.”
The yield on Spain’s 10-year bond increased four basis points, or 0.04 percentage point, to 4.73 percent at 4:27 p.m. London time. The rate dropped to 4.61 percent on April 11, the least since November 2010. The 5.4 percent security due January 2023 fell 0.315, or 3.15 euros per 1,000-euro ($1,309) face amount, to 105.14. The two-year rate added two basis points to 2.13 percent.
Chinese gross domestic product rose 7.7 percent from a year earlier, the National Bureau of Statistics said in Beijing today. That compares with the 8 percent median forecast in a Bloomberg News survey of 41 analysts, and 7.9 percent in the fourth quarter. March industrial production increased less than estimated while retail-sales growth matched forecasts.
A separate report showed euro-area exports rose a seasonally adjusted 0.1 percent from January, when they increased 1.9 percent, the European Union’s statistics office in Luxembourg said today. Imports decreased 2.1 percent after a 2.9 percent gain in January.
German 10-year bund yields fell two basis points to 1.25 percent, after sliding to 1.20 percent on April 5, a day after the Bank of Japan (8301) said it would double its asset purchases to boost the economy. That’s the lowest yield since July 24.
“The 10-year German bund overreacted to the news of bond- buying programs from the Bank of Japan,” said Alessandro Giansanti, a senior rates strategist at ING Groep NV in Amsterdam. “We are trading close to historically low levels.”
The Italian Treasury received orders for 2.9 billion euros of the four-year bonds by 11:06 a.m. in Rome compared with 2.48 billion euros at the end of the first day of the last sale of the securities in October. The order period ends April 18, though the Treasury has said it may close the sale earlier if demand is particularly strong.
The rate on Italian 10-year bonds rose two basis points to 4.34 percent.
Volatility on Dutch bonds was the highest in euro-area markets today followed by those of Finland and Ireland, according to measures of 10-year debt, the yield spread between two- and 10-year securities, and credit-default swaps.
The Netherlands allotted 1.46 billion euros of bills due in July at an average yield of minus 0.027 percent, as well as 1.37 billion euros of securities maturing in October at minus 0.011 percent. France sold 7.7 billion euros of bills maturing between 91 and 350 days.
Greek 10-year bonds were little changed after international policy makers reached agreement to ensure a rescue package remains on track.
Staff teams from the European Commission, the European Central Bank and the International Monetary Fund have concluded their review mission to Greece, the EU, ECB and IMF said in statement today.
Greece’s 10-year yield was at 11.39 percent, after rising 10 basis points in the previous two days.
German bonds returned 0.7 percent this year through April 12, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Italian bonds gained 2 percent and Spanish bonds added 5.1 percent.
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