Berlin: German bonds fell last week, with 10-year bunds reaching their lowest level in more than two weeks, as investors bet Greece will receive European Union support to help tackle its budget deficit.
The yield on the two-year note reached its highest since February 23 as EU leaders considered a proposal to create a European Monetary Fund, an idea the European Central Bank doesn't "reject", according to President Jean-Claude Trichet. French President Nicolas Sarkozy said on March 7 that the region's members are ready to rescue Greece if needed.
"As problems in Greece subside, the obvious victim of that will be the bund market," said Sean Maloney, fixed-income strategist at Nomura International Plc in London. "And the worst of it is past."
The yield on the two-year note rose 5 basis points last week to 1.05 per cent on Friday in London. The 1 per cent security due March 2012 slipped 0.10, or 1 euro per 1,000-euro (Dh5,046) face amount, to 99.91. The yield on the 10- year German bond advanced almost 1 basis point in the period to 3.16 per cent.
The yield on the 10-year Greek bond fell 10 basis points on Friday to 6.23 per cent. The extra yield investors demand to hold the securities instead of German bunds fell 8 basis points to 307 basis points. Greece sold 5 billion euros of a new 10- year bond last week.
