The meeting failed to deliver any promise and effectively put to bed any suggestions that Germany is either warming to joint euro bonds or changing the mandate for the European Central Bank to allow them to stabilize bond yields, said IG Markets. "Mix in further action from the ratings agencies Thursday--with Fitch Ratings downgrading Portugal's debt rating and Moody's Investor Service later downgrading Hungary's rating--and risk appetite diminished in what was a liquidity-scarce market," added IG.
Euro-zone sovereign bond markets possibly face another string of rocky sessions next week as issuers with questioned funding sustainability seek investors for their new debt sales, undoubtedly expensive ones.
"After the recent hiccups in the primary-market arena, all auctions have to be regarded as 'event risks,'" said Commerzbank strategist David Schnautz.
Bond supply will total around EUR19 billion from Italy, Slovakia, Belgium, Spain and France. This week the Netherlands, Germany and Italy--the latter with zero coupon bonds--sold a total of EUR7.74 billion in government bonds.
In the most recent sign of extremely difficult funding conditions, Italy on Friday paid a euro-era-high average yield of 6.504% to sell six-month Treasury bills. For the latest updates on the stock market, visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today
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