Government bonds recorded significant gains during September after two-and-half months of decline as sentiment turned positive on international bond markets, the Bank of Greece said in a press release yesterday. The upturn reflected investors’ response to economic developments in the USA, where the data released during the month showed that though economic recovery is under way, unemployment remains at a high level. As a result, consumer confidence continues to be low; in addition, the economic situation in the eurozone remained relatively weak. This led the IMF, in its last report, to warn about the possible need for further monetary easing. Consequently, investors became more confident that interest rates will stay at historic lows, both in the USA and in the eurozone, for the foreseeable future, the central bank noted.

On the Greek electronic secondary securities market, government bond prices were up between 55-144 basis points (bps) by the end of the month. The 10-year benchmark bond (maturing on May 20, 2013) closed at 103.27, compared to 102.15 at the end of August. The monthly average 10-year yield spread over Bunds narrowed to 12 bps in September, recording a new historic low. Market turnover rose to 65.20 billion euros in September from 54.24 billion in August. Bonds with remaining maturity until 10 years were the most traded, attracting 84 percent of total turnover. The 10-year benchmark bond recorded the highest volume among individual bonds, with 15.57 billion euros.