Today's Coming Crisis Movie

Wednesday, May 16, 2012

EURO GOVT-Bunds extend losses; Spanish, Italian yields fall

May 16 (Reuters) - German government bond futures fell to a session low on Wednesday, while Spanish and Italian bond yields eased with traders citing comments from German Chancellor Angela Merkel reiterating Germany wanted Greece to stay in the euro zone.

June Bund futures were last 56 ticks lower on the day at 142.89, having earlier failed to break above the record high at 143.69.

Spanish 10-year government bond yields reversed an earlier rise to stand 9 basis points lower on the day at 6.28 percent. Similarly, Italian 10-year yields were 7 basis points lower at 5.96 percent.

"We've tested 143.69 record high and we failed, we've had a double top formed and we've seen better selling ever since," a trader said.

"Merkel's comments offered a glimmer of hope, at least it shows that they want to sort it out ... but it still feels inevitable that Greece is going to leave the euro zone."

In an interview with CNBC, German Chancellor Angela Merkel reiterated that Germany wants Greece to stay in the euro, but

warned that the country must play by the rules and honor its commitments. Source