Portugal’s bonds rose, with five-year yields falling from the highest in four weeks, as the nation exchanged 6.6 billion euros ($9 billion) of short-maturity notes for longer-dated debt to ease its funding needs.
European government bonds fell as minutes of the Federal Reserve’s October policy meeting showed the central bank may taper its $85 billion in monthly asset purchases “in coming months” if the U.S. economy improves.
Italy’s 10-year yield approached a five-month low as Prime Minister Enrico Letta said turmoil in former Premier Silvio Berlusconi’s PDL party will boost government stability and the nation sold five-year notes in an exchange auction.
Treasuries rose, pushing yields lower for a second day, as investors weighed prospects for Federal Reserve stimulus at a meeting next week and economic data from Europe and Japan damped growth optimism.
Italy’s government bonds fell for a third week as reports showed the nation’s business confidence worsened and euro-area services and manufacturing grew less than economists forecast, sapping demand for higher-yielding assets.
Italian and Spanish bonds dropped amid speculation the nations will struggle to attract sufficient demand from investors at debt auctions as both sell additional securities this month amid a deteriorating economic outlook.
Spain’s decision to sell 10-year bonds through banks in place of scheduled auctions this week represents an effort to capture lower yields after successful debt sales in the region last week, WestLB AG said.