While Europe tries to float as best it can, Germany continues to score one good blow after another. And this morning was the round of the two-year bond auction that brought yields to an all-time low: +0,07%. The German Treasury raised 4,5 billion euros and demand, despite the almost zero yield, exceeded supply by 1,7 times.
Since the European debt crisis has also spread to peripheral countries, German government bonds are seen as a safe haven by many investors. Porto has become very safe given the sharp drop in yields. As for 1,41-year Bunds, the yield fell to XNUMX%, among the lowest in the last year. The differential with the corresponding Italian BTPs stands at 422 basis points.
It should be noted that Bund yields could in part also reflect assumptions about a future fragmentation of the euro area and a return to a national currency in Germany, and in this way discount an appreciation of the reference currency. Exactly the opposite of what happens on Greek bonds.
However, the Frankfurt Stock Exchange travels in the red and in the middle of the day it marks a -1,70%.
