19.07.2012
By Simon Miller
Investors continue to jump to "safe-haven" government bonds as fears grow over the eurozone.
Following a warning from the International Monetary Fund yesterday that the eurozone was in "critical condition", investors have pushed French, Austrian and Belgian government bonds to all-time lows.
French ten-year yields fell to 2.053% while Austrian bonds dropped to 1.835%. Belgium ten-year also fell to a record low of 2.446% this morning.
The IMF called on the European Central Bank to provide further defences against an escalation of the crisis which could include policies to support demand in the short run and fend off downside risks to inflation, as well as measures to ensure monetary transmission, currently impaired by financial stress in some countries.
It continued: "And to further strengthen its financial markets role, the ECB could also be given explicit responsibility for financial stability and full lender-of-last-resort functions, thereby eliminating bank-sovereign linkages present in the current Emergency Liquidity Assistance scheme."
Meanwhile, Spain has got away €3bn of debt in auctions this morning despite rising yields and falling interest.
Investors' bids on the €2.98bn of short- to medium-term government bonds saw five-year paper worth 2.1 time the amount offered compared with 3.4 times at the last auction while the seven-year bond saw interest at 2.9.
The yields for the 2014 bond was 5.204 compared with 4.335 at the last auction while the 2019 bond saw a 6.701% average yield, up from 4.832. The 2017 bond also saw yield up from 6.072% to 6.459%.
Other stories you may find of interest:
Holding out for a debt restructure
Greece stands before a default abyss but, as Simon Miller discovers, before it rushes to restructure, there are litigating risks from international trade treaties to consider
Impacting on investment
With emerging markets looking for investment, Simon Miller looks at the rise of impact investment and what risks entails in this socially aware vehicle
Fencing off the risk?
The Independent Commission on banking has set the cat among the pigeons with the recommendation to ring-fence retail operations. Simon Miller looks at how this came about and what unintended consequences could arise
