Bond Market Summary – July 4, 2013

Europe

Overnight saw a lot of activity in Portugal, with headlines from the PM attempting to calm the markets; it seemed to have worked at least for equities with the PSI 20 Index rising 195.11 to 5431.6. The focus, however, was on the Portugal bond market where there were some drastic moves: the benchmark Portugal 10 year bond traded as low was 7.11% but ended the session at 7.272%, only narrower by 2.7bps. The Portugal 30Y bond ended trading at 7.402%, or 8.5bps wider. All eyes will continue to be on Portugal following the resignation of two senior ministers this week; PM Coelho has said that he has found a way to maintain the stability of Portugal’s government by forging a relationship with a junior member of the ruling coalition. Stability in Portugal is the key to that country continuing to receive EU aid following the bailouts that have taken place over the past 2 years amid a general dislike for the austerity measures that have been imposed on the country by other EU members as a condition for receiving financial aid.

Today’s auction of Spanish 3 and 5Y bonds are available on our auctions app

European Bond Market Summary

Country 5Y 10Y 30Y
Portugal 6.787% / -5.6bps 7.272% / -2.7bps 7.402% / +8.5bps
Spain 3.389% / -10.7bps 4.627% / -8.7bps 5.23% / -6.8bps
Ireland 2.774% / -3.8bps 4.012% / +3.5bps N/A
Germany 0.602% / -0.9bps 1.654% / +0.2bps 2.429% / +0.9bps
UK 1.378% / unch 2.381% / +0.1bps 3.567% / unch

 

Asia

Asian shares were mixed, with most equity markets ending the session higher. Australia All Ordinaries ended up 1.13% to 4781.02, while the NZ 50 Index ended up at 4458.95. The Kospi 200 ended up 0.82% to 238.56, while Japan’s Topix index ended 0.26% lower to 1170.71. Bond markets were relatively quiet heading into Japan’s 30Y bond auction (results) and the auction was fairly well received.

Asian Bond Market Summary

Country 5Y 10Y 30Y
Australia 3.108% / -0.6bps 3.82% / -0.4bps N/A
New Zealand 3.585% / unch 4.34% / unch N/A
Singapore 1.141% / +6.4bps 2.47% / unch 3.199% / +12.9bps
China 3.41% / +14bps 3.60% / +9bps 4.19% / -16bps

 

US

US Markets are closed today for the July 4th Independence Day holiday, but will be open again tomorrow. The major focus for the US markets will be the monthly Bureau Of Labor Statistics jobs number, which after Wednesday’s preview with ADP and Weekly Claims, people are expecting this number to show a slight improvement in the unemployment rate, which if it does occur, will give those who believe that the Fed may have to taper it’s QE program sooner rather than later more fuel to add to their bond shorts. If the number does come in better than expected, I personally believe that we will see yields continue to rise especially in the 10y sector where we could see a touch of 2.60%.

US Bond Market Summary

Tenor Yield
2Y 0.3632%
5Y 1.4157%
7Y 1.9663%
10Y 2.5032%
30Y 3.4931%
 
2Y Swap Rate / Sprd 0.519% / 15.6
5Y Swap Rate / Sprd 1.558% / 14.2
7Y Swap Rate / Sprd 2.138% / 17.1
10Y Swap Rate / Sprd 2.688% / 18.4
30Y Swap Rate / Sprd 3.438% / -5.51

 *Data provided by Thomson Reuters. All data is using the bid price point unless otherwise specified. ATYS Bonds makes no guarantees to the accuracy of the data or opinions provided herein.