The government bonds of Spain, Italy and Ireland rose this week, pushing the nations’ 10-year yields to record lows, as improving economic data and the prospects of additional European Central Bank stimulus buoyed demand.
Europe’s worsening growth prospects are losing significance for bond investors as bets the European Central Bank will begin asset-purchase stimulus measures support demand for the region’s higher-yielding bonds.
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.
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.
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.