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German Bunds Slip Before Ifo As Spain Two-Year Yield Rises To 7%

Published: July 25, 2012 | 7:56 am
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German 10-year bunds slipped before a report that economists said will show business confidence in the nation fell in July, adding to speculation the debt crisis is deepening in Europe’s biggest economy.
Thirty-year yields rose for the third day before the nation sells as much as 3 billion euros ($3.6 billion) of the bonds, while yields on Spain’s two-, five-, 10- and 30-year securities were above 7 percent. Italy’s 30-year bond yield climbed to 7 percent for the first time since January. Germany also plans to auction as much as 1 billion euros of inflation-linked debt maturing in April 2023.

The German 10-year yield rose two basis points to 1.25 percent at 7:48 a.m. London time. It fell to 1.127 percent two days ago, matching a June 1 record low. The 1.75 percent security due in July 2022 dropped 0.155, or 1.55 euros per 1,000-euro face amount, to 104.615.
Germany’s 30-year yield advanced two basis points to 2.17 percent, while the two-year note yield was at minus 0.072 percent, below zero for the 14th consecutive day.
The Munich-based Ifo institute’s index of the business climate in Germany, based on a survey of 7,000 executives, dropped to 104.5 in July from 105.3 a month earlier, according to the median estimate of 35 analysts in a Bloomberg News survey. That would be the lowest reading since March 2010.
German Finance Minister Wolfgang Schaeuble and his counterpart from Madrid said Spain’s borrowing costs don’t reflect the strength of its economy as they pledged to work toward deeper integration to fight the debt crisis after a meeting yesterday.
Bunds fell yesterday, pushing up yields from near all-time lows, after Moody’s Investors Service cut the outlook on the nation’s top Aaa rating, citing concern it will have to support weaker euro-region members.
German debt returned 4.1 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Spanish securities lost 9.6 percent, while Italy’s rose 3.9 percent.

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