Spain pressured on Greek woes

German, France to auction bonds

By Kirsten Donovan

LONDON, May 16 (Reuters) German government bond futures tested record highs on Wednesday and Spanish and Italian yields rose after Greece said it would hold Canada Goose Online new elections, heightening fears it buy canada goose jacket cheap could ultimately leave the euro and boosting demand for safe, liquid assets.

Greek political leaders will meet on Wednesday to form a caretaker government to lead the canada goose uk black friday country into a second election likely to be held in mid June, canada goose uk outlet after the failure of last ditch canadian goose jacket negotiations to form a government of technocrats.

market is still canada goose black friday sale underestimating the impact of Greece leaving the Canada Goose online euro and things do feel very fragile, a bond trader said.

Markets were nonetheless firmly in mode with European shares falling sharply and the euro extending losses to a four month low against the dollar.

The risk is that Greek parties opposed to canada goose topparka clearance sale euro zone bailout conditions will gain seats, leaving the country future as a member of the single currency in doubt.

While a Greek exit might be manageable in isolation, a much bigger problem canada goose could be caused if contagion spreads to the larger economies of Spain and Italy which are also implementing unpopular austerity measures and raises the need for euro zone or European Central Bank cheap Canada Goose support.

is manageable but if they uk canada goose outlet set the precedent of leaving, or even defaulting and staying in the euro zone, then it raises the question of who is next, said DZ canada goose clearance Bank rate strategist Michael Leister. market is already taking the our web page second cheap canada goose uk and third step canada goose coats beyond that and looking at the Canada Goose sale indirect costs.

Spanish 10 year government bond yields canada goose coats on sale rose 14 basis points to 6.51 percent, their highest since late November, while the Italian equivalent hit its highest level since the end of January, up 8 bps at 6.11 percent.

A sustained uk canada goose rise above 6 percent could push borrowing costs to levels that are unaffordable in the longer term, as happened to Ireland and Portugal, both of which were forced out of bond markets and into taking bailouts.

Irish 10 year yields were 14 basis points higher at 7.50 percent after rising over 30 basis points on Canada Goose Jackets Tuesday as investors fretted about next?

Wednesday offers some European investors the last chance to position ahead of Spanish bond auctions on Thursday when some markets are closed for the Ascension Day holiday. canada goose store That should also be supportive for Bunds, traders and analysts said.

Although the sale is expected to be supported by Canada Goose Coats On Sale domestic banks due to the small size and short maturities, the holiday may weigh on market volumes canada goose uk shop and lead to volatile buy canada goose jacket conditions.

Demand for lower risk Canada Goose Parka paper will be tested with a 5.0 billion euro sale of 10 year Bunds on Wednesday although the ultra low yields may deter some investors from getting involved in the primary markets.

When the July 2022 bond was launched last month, the auction failed to draw enough bids to cover the amount on offer.

the bond first auction was technically uncovered, we expect market expectations to be reasonably low to cope well with a likely to be auction, Commerzbank strategists said in a note.

France will also sell up to 8.0 billion euros of shorter dated paper as well as up to 1.2 billion euro inflation linked bonds.

June Bund futures were 13 Canada Goose Outlet ticks higher at 143.58, having matched their 143.69 canada goose factory sale record. Ten year yields were 2 bps lower at 1.446 percent, just shy of their 1.434 percent lows.