Skip to comments.European Sovereign Yields Go Wild! 17 Of 30 EMEA Countries See 9.4 BP Or Higher Spike
Posted on 09/05/2013 11:30:40 AM PDT by whitedog57
Generally, any day that a country sees a 10 basis point or higher jumps in its sovereign debt yield is notable. But when the majority of European countries see a 10 basis point spike in one day, it is MONDO notable. This list includes Germany, UK, Russia (dollar denominated) and Sweden.
Even Portugal, Italy, and Spain of the PIGS had yield spikes of over 10 basis points. Greece, the remaining PIG, only rose 5.3 basis points.
And on the bottom end of Eurpoe (EMEA) is Ukraine, the only EMEA country with a decline. And that was a spares -0.7 basis point decline.
According to Bloomberg: Five-year Treasury yields increased 10 basis points to 1.84 percent, the highest since July 2011, and 30-year rates added eight basis points to 3.87 percent.
Germanys 10-year bund yield rose 10 basis points to 2.04 percent, the highest level since March 2012. The rate on French 10-year bonds increased 10 basis points to 2.63 percent as Frances borrowing costs rose at an auction today to the most since President Francois Hollande was elected. The government sold 4.24 billion euros ($5.59 billion) of 2023 debt at an average yield of 2.57 percent.
Gilts stayed lower, with the 10-year yield rising 13 basis points to 3.01 percent after Britain kept rates on hold and refrained from adding to its stimulus program.
The krona dropped versus all 16 of its major peers after Swedens central bank stuck to a plan to start raising borrowing costs late next year. Swedens 10-year bond yield jumped 15 basis points to 2.74 percent, the highest since July 2011.
Austrian, Finnish, and Dutch 10-year yields also reached the highest in more than a year. With the UK leading Europe in Real GDP growth at 1.5% and the PIGS in negative territory, it is time to say Oh my.
this is bad news, right?
This is not an indicator that average people can understand. If you know, it would help if you wrote a small paragraph indicating what the Sovereign debt is and what 10 basis point rise in it means to the world. Thanks.
I have no idea what I'm talking about, but I'll take a stab at it. Someone who knows more (i.e. anybody who is not me) can tell me if I'm right.
I'm guessing that the rise in rates indicates a widespread perception in the relevant investment community that buying the debt offerings of national governments has become a much riskier play.
If your credit sucks, and your risk of defaulting is high, that means anyone who is still willing to lend you money will charge you higher interest rates for the loan.
Essentially, the market perception is that the affected national governments are now deemed to be less credit worthy than in the past, and the risk of owning their debt is much higher than it has before.
Am I on the right track?
Well put. I was going to ask the same question in a more sacastic manner:)
Sovereign debt is government debt. For example US Treasury Bonds are our sovereign debt.
Basis points are 1/100 of a percent. So a rise of 9.4 basis points in an interest rate means that interest rates went up .094 % today.
I don’t know why this is THE day that that fact becomes significant, though.
Oh, my! The sky has fallen! /s
10-year bunds since 1960:
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.