European govt bonds advance on Dubai debt-delay concern
Friday, 27 November 2009
LONDON, Nov 26 (Bloomberg): European government bonds rose as a proposal by Dubai to delay debt payments spurred investors to seek the safety of assets perceived to be lower risk.
The gain pushed the German 10-year bund yield to a three- week low after government-controlled Dubai World, with $59 billion of liabilities, sought a "standstill" agreement from creditors. The European Central Bank will say today that M3 money-supply growth, which the bank uses as a gauge of future inflation, slowed to 0.8 per cent in October from 1.8 per cent in September, according to a Bloomberg survey.
"The problem of government deficits hasn't been resolved yet," said Elwin de Groot, a senior market economist at Rabobank Groep in Utrecht, the Netherlands. "When fears about potential defaults increase, there is some impact on those that are investing in bonds. They would rather chase the most reliable, safe places and Germany is one of them."
The gain pushed the German 10-year bund yield to a three- week low after government-controlled Dubai World, with $59 billion of liabilities, sought a "standstill" agreement from creditors. The European Central Bank will say today that M3 money-supply growth, which the bank uses as a gauge of future inflation, slowed to 0.8 per cent in October from 1.8 per cent in September, according to a Bloomberg survey.
"The problem of government deficits hasn't been resolved yet," said Elwin de Groot, a senior market economist at Rabobank Groep in Utrecht, the Netherlands. "When fears about potential defaults increase, there is some impact on those that are investing in bonds. They would rather chase the most reliable, safe places and Germany is one of them."