Germany’s government bonds led declines among the euro region’s sovereign securities as a U.S. job report boosted speculation the Federal Reserve will bring forward a reduction in its asset-purchase program.
Portuguese bonds dropped and German 10-year government debt yields reached a 20-month high after the Iberian nation sought a bailout and investors bet the European Central Bank will raise interest rates today.
Irish bonds tumbled for a 10th consecutive day and the extra yield investors demand to hold the debt instead of benchmark German bunds reached a record on concern the nation is struggling to redress its budget deficit.
German government bonds dropped for a second day, pushing 10-year yields to the highest level since April 2012, as demand for fixed-income assets fell amid concern that policy makers around the world will reduce stimulus.
The two-year Treasury yield was near the lowest in six weeks as stocks declined and accelerating Chinese economic growth fuelled concern the government will raise interest rates further to calm inflation.
Italy’s 10-year borrowing costs declined to a 2 1/2-year low at an auction today after new Prime Minister Enrico Letta was sworn in, ending a two-month political standoff caused by inconclusive elections.
German bonds declined, with 30-year yields posting the biggest two-day increase since 2009, as Denmark’s decision to ease liability rules for pension funds damped demand for longer-maturity fixed-income assets.