German Bund yield holds near one-week high

Britain's 10-year gilt yield rose to 0.15% - its highest in almost two weeks - after the Bank of England left its monetary policy unchanged on Thursday. The BoE said it made no changes to its key interest rate, standing at just 0.1%, or its huge bond-buying programme.


Reuters | Updated: 06-08-2020 12:57 IST | Created: 06-08-2020 12:57 IST
German Bund yield holds near one-week high

Germany's benchmark 10-year bond yield touched a new one-week high on Thursday as the prospect of fresh bond supply and upbeat data put euro zone bond markets on the back foot. The 10-year Bund yield touched -0.49% in early trade, its highest level in about a week.

Having fallen to within striking distance of 2-1/2-month lows on Tuesday, yields in the euro zone benchmark bond issuer have drifted back-up, rising almost 5 basis points on Wednesday. With France and Spain scheduled to sell bonds later on Thursday, analysts said they expected the upward pressure on euro-area borrowing costs to stay in place for now.

In addition, data showed orders for German-made goods rose almost 28% in June compared to the previous month, the latest sign that Europe's largest economy is starting to shrug off the effects of months of the coronavirus-induced lockdown. "We tend to think the market will be looking at sell offs like that of yesterday as buying opportunities, rather than a more bearish signal for now," said Peter McCallum, rates strategist at Mizuho in London.

"The environment remains constructive for European government bond spreads." Renewed optimism about the euro area following last month's agreement on a 750-billion-euro ($890 billion) European Union recovery fund has boosted sentiment towards peripheral bond markets, tightening the yield premium investors demand for holding their bonds over benchmark Germany.

Italy's 10-year bond yield was steady at around 1.04% , little changed on the day but around 25 bps below levels traded a month ago. Britain's 10-year gilt yield rose to 0.15% - its highest in almost two weeks - after the Bank of England left its monetary policy unchanged on Thursday.

The BoE said it made no changes to its key interest rate, standing at just 0.1%, or its huge bond-buying programme. It said the economy would not recover its end-2019 size until the end of next year. ($1 = 0.8427 euros)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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