Southern European yields “enjoy sense of closure”, Interactive Data says

While 2012 saw a continuation of many global macroeconomic issues that plagued and supported financial markets over the past years, in 2013 investors have began to enjoy a sense of closure on multiple fronts and this has been reflected the yields of Southern European countries, according to Interactive Data Europe.

In December, Spanish government bond yields stabilised with the 10yr bond maintaining a level around 5.25%.

“The Spanish government approved the 2013 budget with cuts of €39bn, however, we also saw unemployment continue to rise, bad loans held by local bank rise to €189bn and inflation continuing at above target 2.9%,” the financial information provider said in a recent report.

Meanwhile, Italy faces a general election in February following the decision by current Prime Minister Mario Monti to resign.

“The announcement caused a spike in yields of 20-30 bps, although this recovered to pre-announcement levels by the end of the month,” Interactive Data noted.

Finally, Greece received the next bailout tranche they have been waiting since June for, €49bn in total with €34.3bn paid immediately and the remaining funds to be provided in March 2013.

“The agreement was reached following the success of a scheduled buyback of debt that resulted in the repurchasing of €20bn bonds at around one third of face value. Following on from these actions, S&P raised the rating of Greek debt from selective default to B-. Yields continued to be volatile during the month, with swings of 20 to 30 bps in a day common,” Interactive Data said.

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