Germany’s 10-year bonds snapped a three-day decline as Italy prepared to sell as much as 5.5 billion euros ($7.6 billion) of 2018 and 2024 securities today in the region’s final auction of government debt this year.
Legal & General Investment Management is betting four-year pound swap rates will rise as investors brace for tighter Bank of England policy, and is using the income from European corporate bonds to fund the trade.
Italy’s bonds slumped, pushing the 10-year yield to the highest relative to German bunds this year, as Democratic Party leader Pier Luigi Bersani said there was no chance of a broad coalition to end a political deadlock.
U.K. government bonds rose, pushing the 10-year gilt yield down for the first time in three days, as concern European nations will struggle to finance their deficits pushed stocks down and boosted demand for the safest assets.
The pound gained versus the dollar and the euro after a report showed U.K. services growth unexpectedly accelerated in October, bolstering the view that the Bank of England will keep its policy unchanged tomorrow.