Bond yields drop to five-week lows

The Eurogroup agreement met with a warm reception from bond markets and analysts, triggering a rally in Greek bond prices. This has brought back the prospect of a Greek return to the markets this summer if international conditions allow it.

The yield of the benchmark 10-year bond amounted to 4.151 percentage points on Friday, the lowest point since early May and down 3.64 percent on a daily basis. The five-year paper saw its yield drop 5.9 percent to 3.3 percentage points for a new five-week low.

"The confirmation of the debt-easing deal gives the Greek government a huge breathing space, so we expect to see Greek bonds overperform now and in the short term," noted Chris Scicluna, head of Economic Research at Daiwa Capital Markets.

Laurence Mutkin, chief interest rate strategist at BNP Paribas, added that Greek bonds are returning to investor radars, but warned...

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