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.
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.
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.
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.
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.