U.S. Treasuries and German bunds are down sharply while the weak European sovereign credits being bailed out by the massive EU/ECB/IMF fiscal and monetary full-court press are rallying. Similarly, the euro is sharply higher and the dollar has surrendered some of its safe-haven allure.
The Treasury benchmark 10-year note is down 1 1/4 points in price, pushing its yield back up 15 basis points to 3.58%, while bunds suffer similar losses. These “core” government securities had been bid up sharply by investors fleeing risk assets. Among those were the weak European sovereigns, which are soaring on the near-trillion-dollar bailout and the prospect of buying by the European central bank.
Greece’s five-year sovereign credit default swaps tightened 259 basis points to 657 basis points, Portugal’s CDS dropped 162 basis points to 263 basis points, and Spain’s fell by 82 basis points to 157 basis points, according to data from CMA DataVision, reports Dow Jones Newswires. (A basis point equals $1,000 per $10 million of debt being insured.)
Italian and Irish five-year CDS also dropped by around 80 basis points to 146 and 171 basis points, respectively, according to CMA figures.
In the currency market, the euro jumped over 2% past $1.30 after having lost over 4% last week. The yen, another safe haven, also was weaker, falling even against the sharply lower greenback. The U.S. Dollar Index (DXY), a measure against six major currencies, was down 1.34%.
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