Thursday, February 03, 2011

European Bond Spreads Update

by Calculated Risk on 2/03/2011 06:15:00 PM

With the key European meeting tomorrow, here is a look at European bond spreads from the Atlanta Fed weekly Financial Highlights released today (graph as of Feb 1st):

Euro Bond Spreads Click on graph for larger image in new window.

From the Atlanta Fed:

While there has been some improvement since the start of the year, most peripheral European bond spreads (over German bonds) continue to be elevated, particularly those of Greece, Ireland, and Portugal.

Since the start of the year, the 10-year Greece-to-German bond spread has narrowed by 183 basis points (bps), through February 1. Similarly, the spread for Ireland is 41 bps lower, 54 bps lower for Spain, and down 42 bps for Italy.

Portugal’s spread, however, is essentially unchanged over the period.
The bond yields are up slightly today. The Portugal 10 year is at 6.99%, the Ireland 10-year bond yield is at 8.86%, and the Greece 10-year bond yield has fallen to 10.9%.

From MarketWatch: Merkel: EU to discuss competitiveness on Friday
"We're going to start the talks, and then between now and the March summit, we will firm up the details," [German Chancellor Angela Merkel] said ... The meeting is expected to see plans to expand the [EFSF], with Germany pushing for efforts to boost competitiveness and fiscal discipline