Spanish 10-year Bond Yield Near Two-Week High Before Debt Sale

Spanish 10-year Bond Yield Near Two-Week High Before Debt Sale ; Dec. 16 (Bloomberg) -- Spanish 10-year government bond yields were near the highest in two weeks before the nation’s last sale of securities this year.

German 10-year yields were within three basis points of the highest since May 3 before a report that’s forecast to show euro-region manufacturing and services industries expanded for a 17th straight month in December. Moody’s Investors Service said yesterday it may downgrade Spain’s credit rating, citing the cost of rescuing its banks. European Union leaders begin a two- day meeting in Brussels today to discuss the creation of a permanent crisis mechanism post-2013.

“The market this morning will initially focus on the Spanish auction, particularly in the context of yesterday’s Spanish rating review by Moody’s,” WestLB AG fixed-income strategist led by Jean-Christophe Curtillet in Dusseldorf, wrote in a research report today. “We anticipate good demand.”

Spanish 10-year yields were one basis point lower at 5.51 percent as of 8:18 a.m. in London. The 4.85 percent security due October 2020 rose 0.055, or 55 euro cents per 1,000-euro ($1,323) face amount, to 95.06. German 10-year yields were little changed at 3.04 percent.

Irish 10-year yields fell two basis points to 8.35 percent and Italian bonds were little changed, with the yield at 4.57 percent. Spain is scheduled to auction 4.85 percent bonds due in 2020 and 4.65 percent securities maturing in 2025 today, with the results of the sale published after 9:30 a.m. London time.

PMI Outlook

A composite index based on a survey of euro-area purchasing managers in services businesses and factories likely slipped to 55.3 from 55.5 in November, according to the median estimate of economists in a Bloomberg survey. A reading above 50 indicates an expansion.

Euro-region inflation probably stayed at 1.9 percent in November, economists said before a separate report from the European Union statistics office in Luxembourg in a final reading of that measure.

German bonds returned 5.5 percent this year, compared with 4.8 percent for U.S. Treasuries and 5.2 percent for U.K. gilts, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Spanish bonds lost 5 percent, while Irish debt handed investors a loss of 11 percent and Portuguese bonds 7.4 percent, the indexes show Read More... For the latest updates PRESS CTR + D or visit Stock Market news Today

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