Portuguese bonds led a decline in the debt of Europe’s lower-rated nations, underperforming their German counterparts for the first time in five days as a slump in stocks reduced demand for higher-yielding assets.
Spanish securities also fell amid the political turmoil facing the country. The bonds of the euro zone’s so-called peripheral members had been rallying since the European Central Bank expanded its record stimulus program on March 10, returning 0.7 percent from then through Monday, compared with a 0.2 percent loss in German debt, Bank of America Merrill Lynch bond indexes show.
“There’s an element of risk-off that would likely have resulted in some profit-taking following the strong post-ECB performance of Spanish and Portuguese bonds,” said Orlando Green, a rates strategist at Credit Agricole SA’s corporate and investment-banking unit in London. “And for both countries, there are some domestic fundamental drawbacks, namely politics. That said, we see the decline today as a respite rather than a reversal of the previous days’ move.”
Portugal’s 10-year bond yield rose eight basis points, or 0.08 percentage point, to 3.01 percent as of 11:12 a.m. London time, having declined 24 basis points in the previous four days. The 2.875 percent security due in July 2026 fell 0.72, or 7.20 euros per 1,000-euro ($1,108) face amount, to 98.815.
The extra yield, or spread, that the bonds offer over similar-maturity German debt widened to 2.73 percentage points, from a six-week low of 2.65 percentage points on
The 10-year Spanish bond yield climbed five basis points to 1.52 percent, after falling for the previous two days. The equivalent German bund yield was little changed at 0.28 percent.
Portugal leads slide in bonds of Europe’s lower-rated countries