German Bond Yields Rise as Exports Beat Analysts’ Forecasts

May 21 (Bloomberg) -- German two-year notes declined, pushing yields up from a record low, as a government report showed the nation’s exports rose more than economists forecast.

Ten-year bonds fell before data that economists predict will show business confidence in Germany climbed to a two-year high. The yield difference between two- and 10-year securities narrowed to the least in almost a month as investors reduced bets that the European Central Bank will be able to hold interest rates at a record low for an extended period.

“The exports number is strong and that possibly led to selling this morning, especially after a rally yesterday that saw German yields falling to exceptionally low levels,” said Luca Cazzulani, a fixed-income strategist at UniCredit SpA in Milan. “Overall, the overriding theme in the market remains uncertainty and nervousness.”

The two-year note yield rose three basis points to 0.52 percent as of 8:10 a.m., after falling to 0.44 percent yesterday, the lowest since at least 1990. The 0.5 percent security due June 2012 declined 0.06, or 60 euro cents per 1,000-euro ($1,256) face amount, to 99.98. The yield on the 10- year German bund, Europe’s benchmark government security, advanced one basis point to 2.70 percent.

Exports in the first quarter climbed 2.6 percent from the fourth quarter, the Federal Statistics Office in Wiesbaden said today. The median forecast in a survey of economists by Bloomberg predicted an increase of 1.5 percent.

Greek 10-year bonds fell, sending the yield up 12 basis points to 8.16 percent. Investors demanded an extra 512 basis points of yield to hold the debt instead of bunds.

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