Spain’s government bonds erased gains, with five-year yields climbing from the lowest since 2005, as investors assessed the prospect of the Federal Reserve reducing stimulus earlier than some economists predict.
European government bonds were little changed as investors showed a muted reaction to Standard & Poor’s decision to raise its outlook on Spain’s debt and strip the Netherlands of its top credit rating.
Spain’s government bonds declined for a third day before the nation sells as much as 4 billion euros ($5.41 billion) of securities tomorrow, when European Central Bank policy makers meet to set interest rates.
Spanish bonds rose, pushing 10-year yields to the lowest since May, before the nation makes interest and repayments of about 21 billion euros ($28.9 billion) this week and amid optimism the economy is gaining strength.
German bunds fell, extending their biggest weekly drop since November, amid a global selloff in government bonds spurred by bets U.S. economic growth is gathering pace and the European debt crisis is abating.