Italy’s 30-year bonds rose, pushing yields down to a record, as the European Central Bank’s newly announced bond-buying plan shielded the securities from contagion after anti-austerity party Syriza won elections in Greece.
While Greek 10-year (GDBR10) bonds fell, that move only pared last week’s gains made when the ECB unveiled its quantitative-easing measures. Syriza leader Alexis Tsipras has said he plans to win a writedown of Greek public debt and abandon budget constraints that were imposed in return for aid, while keeping Greece within the euro bloc. His party will form a coalition government with the Independent Greeks. Benchmark German 10-year yields rose from a record low.
“If you are a broad European investor you should be relatively relaxed,” Michael Krautzberger, the London-based head of euro fixed income at the world’s biggest money manager BlackRock Inc. said in an interview on Bloomberg Television’s “The Pulse” with Francine Lacqua. “If you look at the long end in Italy, the long end in Spain, they are actually up in price, down in yield. If the market were super concerned about spillover, we wouldn’t have those reactions.”