Sweden, Norway escape government bond sell-off

Most European government bond markets continued their downward spiral for a third straight day, led by a sell-off in US Treasury markets on Monday.

New supply from the US Treasury pushed yields up (bond prices down) and aided a global downward trend. Europe is showing its sensitivity to uncertainty over when the Fed will start to raise rates. This coupled with concerns that European bond markets are overvalued in light of the ECB’s QE expectations, and whether deflation concerns are over-hyped, are giving the market mixed signals.

Index NameYield as of Friday, May 8, 2015 closeYield as of Monday, May 11th, 2015 closeYield as of Tuesday, May 12th, 2015 closeYield as of Wednesday, May 13th, 2015 closeYield Change in Basis Points Since Friday May 8, close
S&P Germany Sovereign Bond Index0.22%0.26%0.31%0.34%+12bps
S&P France Sovereign Bond Index0.47%0.50%0.56%0.57%+10bps
S&P Spain Sovereign Bond Index1.03%1.04%1.09%1.13%+10bps
S&P Italy Sovereign Bond Index1.13%1.18%1.21%1.24%+11bps
S&P Sweden Sovereign Bond Index0.32%0.32%0.33%0.30%-2bps
S&P Norway Sovereign Bond Index1.32%1.30%1.36%1.31%-1bps

Source: S&P Dow Jones Indices as of May 13, 2015

European government bond markets are moving in tandem for the most part, despite conflicting inflation numbers. While inflation is picking up in Germany and France, with consumer prices rising in both countries for the month of April YOY, Italy and Spain are seeing lower prices. Italian CPI was down at -0.1% for the month of April YOY, while Spain’s CPI is at -0.7% in April YOY. All four of these markets sold off causing yields to spike 10bps and up since Friday’s (May 8) close.

Norway and Sweden did not sell off and actually rallied on Wednesday (13 May). Swedish consumer prices declined 0.2%, causing concerns that Sweden will need to lower rates further. From Friday’s close, the S&P Sweden Sovereign Bond Index yield tightened 2bps to close at 0.30% as of Wednesday. Norway’s CPI for April clocked in at 2% YOY, and its bond market rallied as well. The S&P Norway Sovereign Bond Index, initially sold off on Tuesday only to bounce back again along with Sweden. The S&P Norway Sovereign Bond Index tightened 1bps to 1.31% for the same timeframe.


Heather Mcardle is director of Fixed Income Indices at S&P Dow Jones Indices.

Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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