Azernews.Az

By Bloomberg

The selloff in longer-dated German government bonds over the past three weeks helped drive the yield difference between two- and 30-year securities to the widest since December.

The yield premium investors demand to hold the longer- maturity bunds instead of the short-dated notes increased to 160 basis points on Thursday, the most on a closing basis since Dec. 8 and up from a 6 1/2-year low of 73 basis points reached as recently as April 20. Ireland’s 10-year bonds declined as the nation auctioned 750 million euros ($857 million) of seven-year debt. Some European equity markets were closed for the Ascension Day holiday.

“This reflects an unwind of long positions where investors were moving up the curve for yield enhancement,” said Mohit Kumar, head of interest rates strategy at Credit Agricole SA’s corporate and investment banking unit in London. “The curve flattened in a rally and has sold off aggressively.”

Germany’s 30-year bund yield climbed three basis points, or 0.03 percentage point, to 1.43 percent as of 10:13 a.m. London time. The yield has surged from a record-low 0.435 percent set on April 17. The 2.5 percent security due in August 2046 fell 0.89, or 8.90 euros per 1,000-euro face amount, to 126.93.

The yield on the nation’s two-year notes was little changed at minus 0.182 percent. That on 10-year bunds, Europe’s benchmark sovereign securities, was at 0.74 percent, up from a record-low 0.049 percent reached on April 17. Irish 10-year yields rose one basis point to 1.38 percent.