Interest rates drop as appeal of treasury bonds increases

Greek debt restructuring and potential ECB acquisition increase demand for ‘safe’ investments

Several consecutive days of interest rate increases were wiped out on Tuesday, Børsen reports.

The interest rate on ten-year treasury bonds fell by 10 basis points to 0.76 percent, down from 0.9 percent on Thursday of last week. On 30-year obligations the interest rate fall was even more significant, with a drop of 12 basis points to 1.29 percent after a high of 1.52 percent last Thursday.

Interest rate drops in ‘safe havens’
There were similar falls in Germany, which is also traditionally seen as a ‘safe haven’ for investors.

Greece is in the process of negotiating with creditors, and Yanis Varoufakis, the country’s finance minister, claims that an agreement is close to being reached.

But Nordea assesses that if this doesn’t materialise, there will be international repercussions.

“The international financial markets would react by sending risky assets, like shares for example, down and looking more towards safer treasury bonds with interest rate falls and price increases as a result,” the bank commented.

According to Per Hansen, an economist at the investment firm Nordnet, statements from the European Central Bank (ECB) have also played a part in the development, with signs that the ECB might be investing more intensively in obligations over the coming months.





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