German government bonds are trading lower into the New York session Thursday, amid risk-on trades with stocks higher and Italian & Spanish spreads tighter. However, Greek spreads are wider as markets trade cautiously amid ‘the ISDA (ides) of March’. The ISDA began its meeting today and is expected to rule before Monday on whether Greek CDS contracts should payout. In addition, the ISDA will decide on whether or not the ECB has been granted preferred treatment over private investors, thus triggering a default. Italian bonds are outperforming other EMU peripheral bonds given the strong redemption & coupon payment due today for E27.15bln & E5.5bln, respectively. Italy 10-year yield spread is 25bps tighter at +311bps. Earlier this morning, Italy 2-year BTP yield broke below 2% earlier and 10-year BTP yield below 5% – hitting the lowest level since Aug 22, 2011. Spain 10-year spread is 13bps tighter at +302bps following strong auction results, where E4.501bln total size was allocated vs target E3.5-E4.5bln. UK sold stg2.75bln 4.00% 2022 Gilt, cover 2.07 times and tail 0.3bps.
EasyForexNews Research Team