Government bonds recorded further small losses during June on international markets, mainly at the short end of the yield curve. This was due to investors? expectations of a monetary policy tightening in the US on the back of strong economic data released during the month. Indeed, the FED raised interest rates by 25 bps on June 30. At the same time, the gradual economic recovery in the Euro-zone continued and inflation picked up fuelled by higher oil prices, contributing to the general downbeat market sentiment.

In the Greek electronic secondary securities market (HDAT) government bond prices fell for all maturities with the exception of the 20-year benchmark bond (maturing on 22/10/2022) that posted a small gain of 7 price basis points. 5 and 7-year benchmark bonds recorded the highest losses, of 51 and 58 bps respectively, while the price of both the 3 and the 10-year benchmarks fell 37 bps. More in details, the 10-year benchmark bond (maturing on 20/5/2014) was trading at 99.63, with a yield of 4.54%, on June 30 from 100.00 (4.49%) at the end of May. The average monthly yield spread between the latter and its German counterpart narrowed to 18 bps in June from 22 bps in May, a change that was almost entirely due to the change of the 10-year benchmark in Germany (the latter has maturity date 4/7/2014, hence one and a half months later than the Greek 10-year benchmark).

The yield curve became considerably flatter during June, as yields at the short end of the curve (3-year) rose around 13 bps while at the long end (20-year) they fell 1 bps, in line with investors? expectations of higher interest rates in the near future. The 3 to 20-year yield gap therefore declined to 182 bps at the end of June from 195 a month earlier.

Market turnover on HDAT recorded a new historic high in June of EUR 80.48 billion (the previous high was recorded in October 2003 with EUR 79.72 billion) after EUR 61.83 billion in May and compared to EUR 61.94 billion in June 2003, with an annual increase of 30%. The most actively traded bonds on HDAT were those with remaining maturity between 7 and 10 years, which absorbed 59% of the overall volume. Amongst individual bonds, the 10-year benchmark recorded the highest traded volume for the fourth month in a row, with EUR 31,14 billion worth of transactions, followed by the 10-year bond maturing on 20/5/2013 with EUR 6.79 billion. Of the 14,293 orders executed in HDAT during June 51.87% were "buy" orders and 48.13% "sell" orders.