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UPDATE sells Euro-2 zone bonds; Italy has set the best month since May | Instant News

* Eurozone periphery government bond yields tmsnrt.rs/2ii2Bqr (Updates throughout)

By Elizabeth Howcroft

LONDON, July 31 (Reuters) – Eurozone government bonds were sold on Friday, both in the core and periphery, with Italian 10-year bonds set as the worst day since early May but still producing strong performance throughout the month.

With the market widely cautious on Friday, analysts said the sell-off could be triggered by an unusual month-end flow.

“I attribute it to long-term, long-term positions from dealers who may be mistaken because of the sale of real cash flow,” said Peter Chatwell, chief of multi-asset strategy at Mizuho.

Analysts were surprised by the move, because the month-end index extension – where funds rebalanced their portfolios to reflect activity during the month – was expected to support bonds at the start of the session.

Italian 10-year yields are at their highest level in more than a week, up 6 basis points (bps) at 1.092% at 1449 GMT.

However, Italian bonds have experienced a decent month, with yields set down 24 bps in July – the best month since May. The paper demand was driven by recovery funds agreed by the European Union last week.

The 750 billion euro fund, which will partly be offered as a grant to the member states hardest hit by the coronavirus, has been hailed as a game changer for the eurozone and has increased Italy’s debt, given concerns about the country’s sustainability. loan.

Italy’s risk premium pays Germany for 10-year debt falling to March lows when the fund was agreed, although it has risen again this week, and is 3 bps wider on Friday at 160.65 bps.

Mizuho Chatwell said the Italian rally that was easing this week could be due to oversupply.

“What happened to BTP was a bit exhausted after recording a number of supplies,” he said.

“I think the market is now saturated with this positivity, but supply continues to run,” he added.

The 10-year German Bund benchmark was set for the best month since April, as investors flocked to safe-haven debt, pushing yields below -0.5%.

Safe-haven bonds are likely to remain supported given the increasing number of coronavirus cases around the world, raising fears of new lockouts.

Global fund managers prefer to cut equities to their lowest level in four years in July while keeping bond allocations unchanged, as hopes for economic recovery fade, a Reuters poll shows.

Data on Thursday revealed a record contraction in Germany – the region’s leading economy – and sent Bund results to two and a half month lows, but there was little reaction on Friday to the euro zone GDP estimates.

But euro zone inflation suddenly rose in July, supporting the European Central Bank’s expectations that negative headline readings could be avoided. (Reporting by Yoruk Bahceli and Elizabeth Howcroft; editing by Gareth Jones and Mark Potter)


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The German Bund Safe-haven is supported by US / Chinese tensions | Instant News

* Eurozone periphery government bond yields tmsnrt.rs/2ii2Bqr

By Dhara Ranasinghe

LONDON, July 27 (Reuters) – The benchmark 10-year German bond yield slumped Monday as a sign that jitters in world markets over rising US / China tensions pushed investors into safe haven assets.

China took over the place of the US consulate in the southwestern city of Chengdu on Monday, after ordering the facility to be vacated in retaliation for last week’s dismissal from its consulate in Houston, Texas.

Worsening relations between the two biggest economies in the world pushed safe havens such as gold and government bonds, allowing German debt to recover from price losses on Friday triggered by stronger-than-expected purchasing manager data (PMI).

Yields on German 10-year bonds were last down about 1.5 basis points at -0.456%, after rising 4 bps on Friday.

“Risk assets are struggling … while for the Bunds the textbook reaction to the PMI combined with another failed test of the -0.50% level leaves 10-year results in the middle of the range,” said Commerzbank pricing strategist Michael Leister.

Italian bond yields are slightly lower, with sentiment towards the periphery supported by increasing confidence that aggressive fiscal and monetary stimulus in the euro area will help dampen its economy from coronavirus attacks.

Yields on Italian 10-year bonds dipped to 1.06%, holding close to the lowest level of 4-1 / 2 months last week. The gap over the 10-year benchmark German Bund yields briefly narrowed to around 148 bps, the most stringent in five months.

European Union leaders last week reached an agreement on a 750 billion euro ($ 878 billion) COVID-19 recovery fund, agreeing to raise billions of euros on the capital market on behalf of all 27 countries, in an act of unprecedented solidarity.

“We think that (the spread of Italian / German bond yields) can tighten 15-20 bps from here, the amount becomes less important than the direction,” said Jorge Garayo, senior level strategist at Societe Generale. “This recovery fund is important because it marks a very important step towards something that was previously taboo – fiscal transfers.”

$ 1 = 0.8542 euros Reporting by Dhara Ranasinghe Editing by David Holmes


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UPDATE 2-Italian bonds are set for the best week in two months | Instant News

* Italian 10-year bond yields fell 16 bps this week

* Set for the biggest weekly decline in 2 months

* German Bund results briefly touched 2-month lows of -0.499%

* Eurozone periphery government bond yields tmsnrt.rs/2ii2Bqr (Add comments, update prices to close)

By Dhara Ranasinghe

LONDON, July 24 (Reuters) – The Italian bond market is ready for the best week in two months on Friday, even as borrowing costs rise from 4-1 / 2 month lows set after this week’s agreement on a European Union recovery fund to support the economy hit by coronavirus.

Bond yields across the euro zone rose after data showing eurozone business activity recovered in July and signs of rising US / Chinese tensions prompted investors to take profits on rising prices this week and yields fell.

Yields on Italian 10-year bonds rose 2 basis points to 1.07%, from Thursday’s low of around 1.04%.

However, Italian yields fell around 16 bps this week, set for the biggest weekly decline in two months. According to Tradeweb data, Italian 10-year bond yields fell below 1% on Thursday for the first time since March.

Yields on Spanish and Portuguese 10-year bonds are down about 6 bps this week, Greek yields have fallen 10 bps.

“The impact of the recovery fund is not fully appreciated and is still not fully appreciated,” said Peter Chatwell, head of multi-asset strategy at Mizuho. “The structural part of this story is that it allows the risk of the euro to split to a level that has not been seen for some time.”

In Germany, yields rose from two-month lows after the euro zone flash Composite Purchasing Managers Index (PMI), seen as a good indicator of economic health, rose to 54.8, the highest since mid-2018 and above forecasts. The final reading for June is 48.5.

The 10-year Bund yield held up to 4 bps at -0.44%, after briefly touching a two-month low in early trade around -0.50% because German bonds also benefited from renewed optimism about the euro area.

Three forces seem to play a role – a strong fiscal response, an aggressive stimulus from the European Central Bank, and a perception of better handling the health crisis versus the United States.

It also helped raise the euro to 21-month highs against the dollar this week.

European Union leaders on Tuesday approved a 750 billion euro recovery fund, which according to Italian Prime Minister Giuseppe Conte would allow his government to change Italy. Italy and Spain, the two countries hardest hit by the pandemic, are among the biggest beneficiaries of the agreement.

“We think the Recovery Fund is a key element for Europe’s response to the shock. The ECB is helping to cope with large funding needs but cannot replace every foreign investor in the periphery, “analysts at BofA said in a note.

Reporting by Dhara Ranasinghe; edit by Larry King and Steve Orlofsky


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Italian bonds are set for the best week in two months | Instant News

* Eurozone periphery government bond yields tmsnrt.rs/2ii2Bqr

By Dhara Ranasinghe

LONDON, July 24 (Reuters) – The Italian bond market is ready for its best week in two months on Friday, with borrowing costs holding near 4-1 / 2 month lows after an EU recovery fund agreement that will provide support to economies like Italy devastated by coronavirus.

Even US-Chinese tensions that have weighed on investor sentiment and world stock markets failed to place a significant decline in the southern European bond market, which tends to move in line with world risk assets.

Italian 10-year bond yields stabilized around 1.05%, holding near Thursday’s 4-1 / 2 lows at 1.04%. According to Tradeweb data, Italian 10-year bond yields fell below 1% on Thursday for the first time since March.

Italian bond yields have fallen 18 basis points this week and are set for the biggest weekly decline in two months. Yields on Spanish, Portuguese and Greek 10-year debt each fell by around 10 bps.

The German Bund result is a touch lower on Friday at -0.49%.

European Union leaders on Tuesday approved a 750 billion euro recovery, which according to Italian Prime Minister Giuseppe Conte would allow his government to change Italy. Italy and Spain, the two countries worst hit by the pandemic, are also among the biggest beneficiaries of the agreement.

In addition, aggressive stimulus from the European Central Bank and signs that the eurozone economy is recovering from coronavirus attacks have boosted investor sentiment towards regional assets. The euro is trading near 21-month highs.

This background encourages what is called a carry trade, where investors borrow at low interest rates and invest in higher yield assets such as Italian debt.

“Flash” Purchasing Managers’ Index of economic activity data in July released on Friday could provide another impetus for sentiment, analysts said.

“Today’s PMI must provide further confidence to catch carry,” said Michael Leister, tariff strategist at Commerzbank. (Reporting by Dhara Ranasinghe; Editing by Catherine Evans)


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UPDATE 2-Italy yields rise from lows after a European Union recovery agreement | Instant News

(Correcting days in the first paragraph to Tuesday)

* Eurozone periphery government bond yields: tmsnrt.rs/2ii2Bqr

By Elizabeth Howcroft

LONDON, July 21 (Reuters) – Eurozone bonds were sold on Tuesday, with Italian yields rising again after reaching the lowest level since early March in early London trade after European Union leaders agreed on a massive coronavirus recovery fund to support the bloc.

The European Union approved 750 billion euros ($ 860 billion) in the early hours of Tuesday after a long summit that lasted nearly five days. The agreement was welcomed by the market as a significant step in shoring up the eurozone economy against the shock of COVID-19.

In a compromise agreement, the package will consist of 390 billion euros in grants – less than the previously targeted 500 billion euros – and 360 billion euros in cheap loans.

The economy that is driven by Italian tourism is among the most severely affected by this virus. Prime Minister Giuseppe Conte said that 28%, or 209 billion euros, would be for Italy, giving the country the opportunity to “start over with force”.

Yields on Italian 10-year government bonds, which have dropped 70 basis points in anticipation of funds since it was first proposed on May 18, fell further on Tuesday morning. It reached 1.117% – the lowest since the first week of March – before recovering to 1.172% at 1457 GMT.

It was set to end the day for the first time after seven consecutive falls.

The spread between core and peripheral yields was tightened, with 10-year German-Italian yields approaching the narrowest in four months before widening again to around 162 basis points. .

“With protracted negotiations being avoided, we see the way cleared for the 10Y Italy-Germany deployment through our 150bp target this summer,” ING strategists wrote in a note to clients.

“The benefits of bringing in peripheral debt, and lower prospective volatility thanks to ECB intervention, make it a superior alternative to core bonds, in our view.”

The spread of Portuguese and Greek in Germany is also getting tougher.

German, French and Dutch results edged up around 1 basis point but were largely unchanged by the news. The German 10-year yield is at -0.454%, after moving in a narrow range of 12 bps so far this month.

“It is possible that the extraordinary non-compliance of the Bunds in the face of peripheral rally reflects the fact that the division of responsibilities promised by the IMF is even more tokenistic than it appears,” wrote Rabobank-level strategists.

The market takes confidence not only from the size of the fund itself but also from demonstrations of solidarity and debt sharing between EU countries.

But European Central Bank Vice President Luis de Guindos said on Tuesday that a new wave of the coronavirus crisis in areas such as the United States, Latin America and parts of Asia could reduce European growth.

ECB board member Isabel Schnabel was quoted on Tuesday as saying that investors should not read too much about decreasing ECB bond purchases, because they could increase later. He said that the ECB would likely use the entire bond purchase quota. ($ 1 = 0.8707 euros)

Reporting by Elizabeth Howcroft; Editing by Alison Williams


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Italian bond yields fell to lows in early March as the potential for a EU recovery fund deal grew | Instant News

* Eurozone periphery government bond yields tmsnrt.rs/2ii2Bqr

By Yoruk Bahceli

AMSTERDAM, July 20 (Reuters) – Italy’s borrowing costs fell to the lowest level since early March on Monday when signs of a potential agreement began to emerge from a full EU summit aimed at approving a 750 billion euro economic recovery fund.

The proposed fund, which envisages the division of responsibilities in offering grants to the hardest hit countries, has been the main driver of the rally in South European bonds led by Italy since May, following an initial proposal, similar to a Franco-German one.

The summit, which was originally scheduled for Friday and Saturday, stretches to Monday when the fiscal-led countries of the Netherlands strongly reject the size of grants for the countries most affected and demand conditional assistance in economic reform.

But this week’s agreement looks likely after Bloomberg News reported that “thrifty” countries were prepared to receive 390 billion euros from funds offered as grants and the remainder as loans – less than € 500 billion in grants originally proposed by the European Union.

Diplomats had previously told Reuters leaders that they might leave the summit and try again to reach an agreement next month. The summit is postponed from Monday to 1600 CET (1400 GMT).

After the market last week assessed the prospect of an agreement reached at the weekend increasingly unlikely, Italian bonds rallied to the latest optimism at the opening session.

Italian 10-year yields dropped to the lowest level since March 9 at 1.19%, erasing many coronavirus sales which pushed them as high as 3%. Last down 4 basis points today at 1.21%

That reduced the closely watched risk premium Italy paid for its 10-year debt over Germany to its lowest level since the end of March at 163 bps.

“This is very much material, meaning that there will be significant support going forward. But I think what is more important than the current package size is the funds implemented (altogether), “said Peter Chatwell, head of multi-asset strategy at Mizuho in London, who hopes the deal might be sealed later Monday.

But Chatwell also warned that negative headlines surrounding the terms could cancel some of the gains in further trading.

“If there are more rigid and unpleasant conditions, which are more related to the conditions of stability and growth of the pact, or conditions that are usually associated with a bailout agreement, which will break the gap in positivity.”

German 10-year safe-haven yields rose 2 basis points to -0.44%. (Reporting by Yoruk Bahceli Editing by Mark Heinrich)


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New Zealand pleased with ‘massive’ Belgian friendship | Instant News

WELLINGTON (Reuters) – New Zealand coach Danny Hay said his team will be able to test themselves against some of the best players in the world when they face top-ranked FIFA team Belgium in a friendly match in October.

New Zealand Football (NZF) said on Friday the match in Brussels was set for October 8, although it still needed approval from the authorities.

International football has been arrested since March because of COVID-19 but will increase in September with the UEFA League of Nations. The match preceded Belgium’s friendly against England away on 11 October and Iceland on 14 October.

New Zealand, ranked No. 122 in the world and based in the remote Oceania confederation, rarely have the opportunity to schedule friendships so far from home and coach Hay is very pleased with the prospect of facing a third-placed team at the 2018 World Cup.

“The prospect of playing the No. 1 team in the world is huge,” said All Whites Hay coach.

“This is a real opportunity for the team to test themselves against some of the best players on the planet.”

NZF Chief Executive Andrew Pragnell said the increasing number of New Zealand players trading in Europe made it easier to organize friendly matches.

“Placing at every sporting event in these times is a challenge but the return of professional football clubs over the past few months, and now international football throughout Europe is very encouraging,” he said.

“The number of Kiwis who play professional football in Europe now makes this schedule more feasible at the moment.”

Reporting by Ian Ransom in Melbourne; Editing by Peter Rutherford


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UPDATE 3-yields on Italian bonds fell to the lowest level since March because Lagarde assured the PEPP | Instant News

* Eurozone periphery government bond yields tmsnrt.rs/2ii2Bqr (Recast, add details, comments)

By Yoruk Bahceli and Dhara Ranasinghe

LONDON, July 16 (Reuters) – Italian government bond yields fell to their lowest level since late March on Thursday because the ECB assured the market that it would most likely use the full force of emergency bond purchases to overcome the economic blow from the coronavirus pandemic.

The ECB is holding back its monetary policy, but is on track to buy up to 1.35 trillion euros in debt until next June under the Pandemic Emergency Purchasing Program (PEPP), and up to 1.8 trillion euros if other purchases are also included.

ECB head Christine Lagarde said that unless there were significant positive surprises, the bank’s baseline case was that the emergency purchase “envelope” would be used in full.

That pushed Italian 10-year bond yields to the lowest level since the end of March, at 1.245%. Lagarde’s comments brought comfort after the recent suggestion from ECB board members that all PEPP “envelopes” might not have been spent, coupled with a slowing down of weekly bond purchases, had raised concerns.

“This is quite convincing for the market and leaves the door open for more stimulus,” said Antoine Bouvet, senior level strategist at ING in London.

Purchasing emergency bonds is crucial to stabilizing the market and narrowing the high risk premium paid by Southern European rulers over German debt, which surged in March when the corona-panic virus gripped the market.

“The basic case in the market now is that the commitment to PEPP is high enough that investors will be pushed into summer carry trade,” said Bouvet from ING, referring to transactions where investors borrow at low interest rates and invest in higher-yielding assets such as Southern European government bonds.

German government bonds also strengthened, with the benchmark 10-year falling to its lowest level in almost a week at -0.47%.

With no expected changes in ECB policy, the euro also remained stable. European stocks were barely moving, with both broader pan-European indices and bank shares remaining in negative territory.

Michael Hewson, chief market strategist at CMC Markets, said the meeting was “just a copy-and-paste of the last meeting”, where the ECB stepped up its emergency bond purchase program.

The responsibility now is on EU leaders to agree on a 750 billion euro recovery fund, Hewson added, although he did not expect an agreement at an EU summit starting Friday.

Some estimate an increase in the amount of excess bank reserves exempted from being charged a deposit interest of -0.50%, which helps offset the impact of negative interest rates on the banking sector. But Lagarde said he saw no reason for change.

“Increasing several levels remains a policy choice … That is something the market thinks,” said Marchel Alexandrovich, European financial economist at Jefferies.

Reporting by Yoruk Bahceli, Dhara Ranasinghe and Elizabeth Howcroft; additional reporting by Julien Ponthus, Olga Cotaga; editing by Mark Heinrich


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Italian yields hit a 1 week high before the European Union summit | Instant News

* Eurozone periphery government bond yields tmsnrt.rs/2ii2Bqr

By Yoruk Bahceli

AMSTERDAM, July 13 (Reuters) – Italian 10-year government bond yields rose to week highs on Monday, as investors remained cautious ahead of a European Union summit at the end of the week.

Investors hope EU 27 will make progress in agreeing to a recovery fund of COVID-19 750 billion euros ($ 848.78 billion). The market has moved to support the fund, which has been largely proposed as a grant to the hardest hit countries like Italy, sending the country’s debt in recent weeks.

But opposition emerged from hawkish countries that opposed grants. The Netherlands will also seek guarantees of budget reform during this week’s negotiations, Prime Minister Mark Rutte said on Friday.

On Friday, European Council President Charles Michel offered a proposal to make funds more palatable. The Hawkish states welcomed the move, but said more work was needed.

Italian 10-year yields rose to the highest in more than a week at 1.33% in early trade. That’s the last 2 basis points (bps) at 1.31%

“I don’t see any major topics that drive up yields – just profit taking after the walk that we have recently seen, especially at the end of June,” said DZ Bank strategist Rene Albrecht.

“Everyone is waiting for the EU summit … We are not sure there will be a solution or some kind of compromise.”

German yields also rose, with the 10-year yield up 2 bps at -0.45%, down from Friday’s 6-1 / 2 week low at -0.49%, as world equities rose.

Market focus is also on the European Central Bank (ECB), which meets on Thursday. Analysts will be watching the ECB weekly bond purchase data later Monday for feelings of a further slowdown in bank bond purchases.

The slowdown has been a potential cause of concern, analysts said, because some ECB bond members suggested the “bond” purchase of emergency bonds might not be fully utilized, while others saw the slowdown as the start for a listless summer period.

As widely expected, Fitch Ratings reiterated Italy’s credit rating at ‘BBB-‘ on Friday, one notch above rubbish. ($ 1 = 0.8836 euros) (Reporting by Yoruk Bahceli; Editing by Christopher Cushing)


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UPDATE 3 – Germany presents the second syndication this year; South European crop yields soared | Instant News

* Eurozone periphery government bond yields tmsnrt.rs/2ii2Bqr (Add details; comments)

By Yoruk Bahceli and Elizabeth Howcroft

LONDON, June 10 (Reuters) – German Bund yields fell on Wednesday as the country received strong demand for a 30-year bond top-up, while South European bond yields rose under pressure from the heavy issuance pace.

Germany collected 6 billion euros through the resumption of bonds in August 2050 through a bank syndicate.

This is Germany’s second sale this year through syndication, in which a borrower hires a bank to sell debt directly to investors, after problems in May.

Syndication helps borrowers increase large amounts, but is more expensive than traditional bond auctions. The scale of debt that needs to be lifted by Europe’s largest economy to counter the impact of coronaviruses has pushed it to issue debt through a format that was previously used last in 2015.

Germany withdrew 31.5 billion euros from orders for sales, although that number dropped from 44 billion euros after bonds were priced not to pay a premium for outstanding bonds.

“There is a huge demand for bonds from the euro zone, especially for Bunds, for safe havens, so I would say most people don’t believe the recent optimism that you can see in the market,” said Rene Albrecht, interest rate strategist at DZ Bank .

Further syndication sales may be made in the second half of this year, but this has not been decided yet, a spokeswoman for the German financial agency told Reuters.

Finland also raised 3 billion euros through 20-year bonds, while Portugal sold 1.51 billion euros of six-year and 10-year bonds at auction.

It has been a tough week for supplies, with Ireland, Spain and Greece selling thick bonds through syndication on Tuesday.

But the scale of fundraising has put pressure on countries with lower ranks in Southern Europe, the results of which have risen sharply.

The debt was boosted last week by a larger-than-expected increase in the purchase of emergency bonds from the European Central Bank, above the prospect of an EU recovery fund of 750 billion euros.

The 10-year Spanish and Portuguese yields touched a two-week high and were last up 5 basis points on that day, while the Italian 10-year yield rose 6 basis points.

“What damages peripherals today is the same as what puts European credit behind, which is issued on a fairly tight spread in large numbers,” said Peter Chatwell, head of multi-asset strategy at Mizuho.

Investors focus on U.S. Federal Reserve meeting No new action is expected, but any hint of stimulus reduction can hammering risk sentiment.

$ 1 = 0.8800 euros
Reporting by Yoruk Bahceli and Elizabeth Howcroft; Editing by
Catherine Evans


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