Geopolitical factors continued to weigh on the global economy and the markets in March. On the outbreak of hostilities in Iraq, fixed-income security yields rose significantly as investors anticipated a swift end to the war, while dismissing published disappointing economic data. Earlier in the month, the European Central Bank had trimmed interest rates by a quarter of a percentage point.

Greek government bonds followed the trends in the eurozone. Price volatility rose as trading activity was affected by the news from the battlefield. On the electronic secondary securities market (HDAT), prices initially soared, reaching new record highs on 11 and 12 March. The price of the 10-year benchmark bond (20.5.2013) rose at 104.42, 121 cents higher than at the end of February, and the price of the 20-year bond (22.10.2022) at 115.04, 175 cents higher respectively. Gains, however, were relinquished gradually, on diminishing uncertainty over the course of war events. At the end of March, prices had declined in the range of 74 (5-year bond, 18.4.2008) and 159 cents (20-year bond, 22.10.2022) compared to a month earlier. The 10-year benchmark bond price was 102.41, to yield 4.29%, compared to 103.21 (4.21%) respectively. The 10-year average yield spread over Bunds narrowed to 23 basis points (bps) in March from 28 bps in February.

The yield curve flattened while shifting upwards as yields at the short end of the curve rose more than at the longer. The 3- to 20-year bond yield spread narrowed to 203 bps at the end of March, from 226 bps at the end of February. The new 3-year bond yield was up at 2.92% on 31 March, from 2.61% at issue (14.3.2003), and the 20-year bond yield up at 4.95%, from 4.83% on 28 February.

HDAT turnover reached EUR 51.14 billion, compared to EUR 47.04 billion in February and EUR 37.32 billion in March 2002. Of the 9,460 orders executed on HDAT, 46.87% were ?buy? orders and 53.13% ?sell? orders. Trading activity was particularly intense in medium to longer-term bonds, which attracted 60.7% of the total turnover. Amongst individual bonds, the 10-year benchmark bond was the most actively traded, with EUR 6.71 billion worth of transactions. Its liquidity, as measured by the ratio of the monthly traded volume over the amount outstanding, increased to 134% in March from 95% in February.