World Economy

Europe Bonds Extend Rout

Europe Bonds Extend RoutEurope Bonds Extend Rout

Bonds dropped around the world, with Treasury yields near the highest this year and Japanese rates jumping the most in two years. European stock-index futures fell amid wrangling over whether Greece will qualify for further aid, and emerging-market currencies dropped.

Yields on 10-year German bunds surged six basis points by 7:11 a.m. in London, while the rate on Japanese bonds climbed as much as eight basis points and that on benchmark Treasuries added two basis points. Euro Stoxx 50 Index futures dropped 0.4 percent and Standard & Poor’s 500 Index contracts were little changed. Chinese shares in Hong Kong fell. The euro climbed 0.3 percent and a gauge of Asian developing-nation currencies fell to a four-week low, Bloomberg reported.

Overblown expectations for the European Central Bank’s quantitative easing plan helped push global debt valuations to extreme levels, triggering a “large and vicious” selloff in European bonds that’s infected other markets, according to Goldman Sachs Group Inc. Greece has readied a repayment to the International Monetary Fund, officials said, as the ECB prepared to reassess emergency funding for the country’s banks.

“This first half of May has one of the heaviest event-risk calendars we’ve seen in a long time,” said Manpreet Gill, a senior strategist at Standard Chartered Bank, said in a Bloomberg TV interview. “Markets are reacting to that and, given how strong the first quarter of the year was, they’re looking for a bit of a reason to take some profit. That’s what we’re seeing a little bit of across asset classes.”

 Bond Moves

Germany’s 10-year notes paid as much as 0.674 percent Tuesday, more than 13 times the 0.049 percent that marked a record-low yield on April 17. Spanish and Italian bond yields jumped 10 basis points.

Japanese bonds due in a decade yielded as much as 0.47 percent, while rates on similar-maturity Australian debt jumped 18 basis points to as high as 3.03 percent, the topmost level since Dec. 9. New Zealand yields rose 10 basis points.

The moves followed a slump in Treasuries that saw the 10-year yield surge as much as 14 basis points Monday, the most since March. The benchmark US rate climbed to 2.30 percent Tuesday.