Gap between Spanish and German bond yields hits two year low

Spain’s 10-year government bond yield premium over benchmark German bunds has fallen to a two year low as recent data fuelled optimism about the global economy.

Ten-year German bond yields stabilised yesterday after rising sharply as US investors moved their money into safe havens.

Yields fell one basis point (bp) to 1.87 per cent after jumping as high as 1.906 per cent yesterday. This came as jobless claims in the US beat expectations, prompting fears that the Federal Reserve may begin tapering off its asset buying programme in the near future.

The yield spread between Spanish and German bonds fell five bp to just 252bp – the lowest since July 2011. The gap between Italian and German ten-year bond yields fell two bp to 235bp.