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For the first time in history, Germany issued long term bonds with a zero percent coupon rate on Wednesday. The demand reveals the deep concerns investors have about the euro zone and their desire for a safe place to park their capital -- even if it costs them money to do so.
For now at least Germany and Greece share the same currency. But don't tell that to investors. On Wednesday the German Finance Ministry pulled off a remarkable feat for a country in a threatened currency union: It issued €4.6 billion of two year bonds with a rate of zero percent. In other words, once inflation is factored in, investors are essentially paying to park their money with the German government.
Because of the strength of its economy, Germany has emerged as a significant benefactor from the problems being experienced by Greece as well as Spain, Italy and Portugal. In Greece worries that a government uncooperative with the European Central Bank could come to power after next month's election forcing an exit from the euro zone has investors as well as ordinary citizens pulling their money out in droves. In Spain concerns over the health of the banking sector have driven up borrowing costs. According to German officials on Wednesday, demand for the zero percent bonds was robust and added that Germany does not intend to offer up bonds with a negative interest rate. "As such, a coupon of zero percent is the lower limit," Reuters quoted a finance official as saying.
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http://www.spiegel.de/international/...-a-834679.html
European debt markets were in disarray. Spain's 10-year yields jumped 26 bps to 6.25% (up 121bps y-t-d). Italian 10-yr yields rose 30 bps to 5.80% (down 123bps). Ten-year Portuguese yields surged 127 bps to 11.96% (down 81 bps). The new Greek 10-year note yield jumped another 431 bps to 28.54%. German bund yields were down 9 bps to a record low 1.42% (down 40bps), while French yields rose 5 bps to 2.84% (down 29bps). The French to German 10-year bond spread widened 14 to 142 bps (widest since last November). U.K. 10-year gilt yields dropped 14 bps to 1.82% (down 15bps). Irish yields surged 46 bps to 7.26% (down 100bps).
http://prudentbear.com/index.php/cre...w?art_id=10666
dissarray sounds about right....
For now at least Germany and Greece share the same currency. But don't tell that to investors. On Wednesday the German Finance Ministry pulled off a remarkable feat for a country in a threatened currency union: It issued €4.6 billion of two year bonds with a rate of zero percent. In other words, once inflation is factored in, investors are essentially paying to park their money with the German government.
Because of the strength of its economy, Germany has emerged as a significant benefactor from the problems being experienced by Greece as well as Spain, Italy and Portugal. In Greece worries that a government uncooperative with the European Central Bank could come to power after next month's election forcing an exit from the euro zone has investors as well as ordinary citizens pulling their money out in droves. In Spain concerns over the health of the banking sector have driven up borrowing costs. According to German officials on Wednesday, demand for the zero percent bonds was robust and added that Germany does not intend to offer up bonds with a negative interest rate. "As such, a coupon of zero percent is the lower limit," Reuters quoted a finance official as saying.
.............
http://www.spiegel.de/international/...-a-834679.html
European debt markets were in disarray. Spain's 10-year yields jumped 26 bps to 6.25% (up 121bps y-t-d). Italian 10-yr yields rose 30 bps to 5.80% (down 123bps). Ten-year Portuguese yields surged 127 bps to 11.96% (down 81 bps). The new Greek 10-year note yield jumped another 431 bps to 28.54%. German bund yields were down 9 bps to a record low 1.42% (down 40bps), while French yields rose 5 bps to 2.84% (down 29bps). The French to German 10-year bond spread widened 14 to 142 bps (widest since last November). U.K. 10-year gilt yields dropped 14 bps to 1.82% (down 15bps). Irish yields surged 46 bps to 7.26% (down 100bps).
http://prudentbear.com/index.php/cre...w?art_id=10666
dissarray sounds about right....
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