Investors flee Eurozone as crisis deepens
INVESTORS renewed their flight from the troubled Eurozone economies in April, figures revealed yesterday, driving up peripheral governments’ borrowing costs.
Surveys of 55 leading investment houses in the US, Europe, UK and Japan showed holdings of Eurozone bonds in balanced portfolios fell to 24.5 per cent, compared with 26 per cent in March and substantially lower than the 26.9 per cent recorded at height of the crisis in November last year.
Borrowing costs fell and funds’ holdings of bonds stabilised at the start of the year after the European Central Bank (ECB) pumped €1trillion (£815bn) in cheap loans into Europe’s banks.
However, yields on Italy’s 10-year bonds rose from five per cent at the start of the month to 5.51 per cent at the end as the impact of the cash injection wore off.
Spanish 10-year yields rose from 5.26 per cent to 5.77 per cent in the month, after peaking at 6.16 per cent – a level last seen in December before the ECB’s action.
Over the month yields on 10-year UK gilts fell from 2.29 per cent to 2.11, after a low of 2.01 per cent, and yields on US Treasuries dropped from 2.23 per cent to 1.91 per cent as investors continued to view the non-Eurozone countries as safe havens.