Italian Finance Minister Fabrizio Saccomanni and Spanish Economy Minister Luis de Guindos said the recent increase in government bond yields will be short-lived.
“It’s a delicate moment,” Guindos told reporters in Luxembourg. “When there is a substantial change in the monetary policy of a country like the U.S. it has this effect.”
Bonds fell around the world yesterday after Fed Chairman Ben S. Bernanke said the central bank may start reducing bond purchases that have fueled gains in markets globally. Italy’s 10-year bond yields rose 7 basis points today to 4.62 percent, the highest since April 3, after surging 29 basis points yesterday. Spain’s 10-year yields rose today to 4.89 percent, also the highest in 2 1/2 months.
“It’s clearly a global market tension originating from outside,” Saccomanni said at a press conference in Luxembourg today. An increase in global bond yields yesterday was “probably due to portfolio adjustments.”
Guindos said the withdrawal of stimulus could also be seen as positive as it means that the “perception of the situation of the economy” has improved. Uncertainty in the market “weighs more on countries with higher debt,” Saccomanni said.
Klaus Regling, managing director of the European Stability Mechanism said yesterday that bond markets of crisis-hit European countries have largely withstood the advance in global interest rates in the past six weeks and that government bond yield spreads for peripheral countries are “still about the same” as they were in April.
“It should certainly help all the European countries that the increase in interest rates here is less than what we see in some other industrialized economies,” he said.
To contact the reporters on this story: Karl Stagno Navarra in Luxembourg at firstname.lastname@example.org; Anabela Reis in Luxembourg at email@example.com
To contact the editor responsible for this story: Jerrold Colten at firstname.lastname@example.org