Spain’s bond yields dropped to an eight-year low and Italian and Greek government securities rallied as evidence mounted the euro-area economy is improving before the European Central Bank meets tomorrow.
Spain’s government bonds advanced, pushing 10-year yields to the lowest since May 2010, as a report showing unemployment fell the most in six months in December added to signs the region’s economy is gaining momentum.
German government bonds slumped last year, with 10-year yields rising the most since 2006, as the euro area’s emergence from its longest recession on record damped demand for the region’s safest assets.
Britain is proposing to revive “perpetual gilts,” first used in the wake of the 1720 South Sea Bubble crisis, to allow the government to borrow for as long as possible at record-low rates, according to two people familiar with budget discussions.
U.K. two-year government bond yields climbed to the highest in six months amid speculation an improving economy will prompt the Bank of England to raise interest rates earlier than the institution forecasts.