Monday , September 26 2022

Bond yields for 1 euro zone fall, Greece is preparing for a seven-year bond sale



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* German Bund's income is high on Friday at 3 1/2-week high

* China data contributes to the relief of global markets

* DBRS maintains the credit rating of Italy

* Greece assigns to banks a seven-year bond issue

* Eurozone peripheral government bond gives tmsnrt.rs/2ii2Bqr (updated rates, added comment, chart)

From Dhara Ranassing

Most of the euro area sovereign bond yields declined from the last 3 1/2-week highs on Monday, with confident signs of the global economy preventing a sharp decline in prices now.

Greece was focused after its authorized banks to issue seven-year bonds, according to IFR Markets

Promoting Chinese data shows that the second largest economy in the world may begin to stabilize thanks to the increased stimulus from Beijing.

China's economic growth slowed down to 6.2% in the second quarter compared to the previous year, the weakest for at least 27 years. Individual data, however, show that industrial production and retail sales in the country outweigh the forecasts.

This followed stronger than expected economic data in Europe and the United States last week, prompting investors to reverse some of their more pessimistic views of global growth.

"The Federal Reserve has signaled what the next steps will be in politics, but there is also a question of what will happen if data is improved," says Matthew Cairns, Rabobank's fixed income strategist.

The weakness of the stock markets has become a demand for safe haven bonds. 10-year yield on German bonds fell by 2.5 basis points to minus 0.27%, compared with 3 1/2-week highs on Friday.

It has risen by about 15 basis points. from the record low earlier this month, and returned to the bottom of June 18, when ECB President Mario Draghi's comments sparked expectations for a quicker monetary easing.

"The entire bond movement lost steam last week," said Norbert Ute, interest rate strategist at Bayerische Landesbank. "What we saw was the domestication of market expectations to ease the European Central Bank, and also the ECB reassured expectations for a new QE (quantitative easing)."

Most 10-year yields on euro area bonds were two basis points lower.

The carefully observed difference between the 10-year yield on Italian and German bonds was 3 basis points lower to about 195 basis points after DBRS on Friday maintained Italy's sovereign credit rating with BBB (high).

The rating agency indicated progress with banks in the country to improve credit quality and the government's commitment to a stricter fiscal strategy.

The bond to Italian bonds improved this month after Rome escaped EU sanctions in relation to its fiscal stance and as expectations rose to return to the ECB's asset purchases.

Greek bond markets have shown a weak reaction to the news that Greece has outsourced its new bond to banks.

The deal for syndicated bonds from Greece was expected from the markets after elections earlier this month. Greece's public debt is among the best-performing this year's promise of more ECB incentives and rising confidence in Greece's own recovery.

Report by Dhara Rannings, edited by Larry King

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