Developments in the Greek government bond market - August 2005
09/09/2005 - Press Releases
Οn international markets government bond yields after having
increased during the first 10 days of August, closed the month at lower levels
than in July and near the historically low levels reached in June. The 25 basis
points (bps) increase in official interest rates by the FED on August 9 did not
have any major impact on markets. Bond yields rose during the first part of the
month following the release of positive economic data both in the US and in the
Euro-zone. However, during the second part of August bond yields inverted their
tendency mainly in response to the continuous increase in oil prices that
started fuelling concerns amongst investors about future economic growth.
Following the disruptions caused by hurricane Katrina in the US, the NYMEX crude
oil futures reached a new record high of USD 70.85 per barrel on August 30,
before falling to around USD 65 per barrel in early September.
In the Greek electronic secondary securities market (HDAT)
government bond yields fell in all maturities with the only exception
represented by the 3-year yield, which remained unchanged at 2.45% as in July.
The 10-year yield declined by 8 bps, to 3.36% at the end of August from 3.44% a
month earlier and the 32-year bond yield by 11 bps to 3.96% from 4.07%
respectively. Therefore, following the pattern seen in all the major bond
markets, the Greek yield curve flattened significantly (bullish flattening),
with the 3 to 32-year yield gap narrowing to 152 bps in August compared to 163
bps in July and to 173 bps in June. Finally, the average monthly yield spread
between the Greek and the German 10-year benchmark bond yields narrowed further
to 21 bps from 23 bps in July.
Benchmark bond prices in HDAT rose during August except for
the 3-year bond price that recorded a small loss of 3 bps closing at 101.19 on
August 31 compared to 101.22 on July 29. As for the remaining maturities, prices
rose between 18 and 209 bps. The highest increase was recorded by the 32-year
bond price that rose to 109.55 at the end of August from 107.46 on July 29,
while the 10-year bond price rose to 102.81 from 102.14 respectively.
The trading volume on HDAT rose to EUR 55.56 billion worth of
transactions in August from EUR 52.48 billion in July. The daily average
turnover was EUR 2.53 billion in August, only slightly higher than in July when
it was EUR 2.50 billion. Investors' interest focused on bonds with remaining
maturity between 7 and 10 years, which absorbed EUR 33.98 billion or 61% of the
overall traded volume. The 10-year benchmark bond recorded EUR 18.72 billion
worth of transactions and the 10-year bond maturing on 20/5/2014 EUR 6.72
billion. Of the 9,859 orders executed on HDAT 50.7% were "buy" orders
and 49.3% "sell" orders.