Left Menu
Development News Edition

UPDATE 2-Euro zone bond yields slip from near-two week highs

Reuters | Updated: 14-01-2020 21:58 IST | Created: 14-01-2020 21:58 IST
UPDATE 2-Euro zone bond yields slip from near-two week highs

Benchmark 10-year government bond yields in the euro area inched down on Tuesday, as debt markets steadied after a sharp selloff the previous session on hopes of an easing of trade tensions between the United States and China After rising to near two-week highs on Monday, most 10-year bond yields edged back down in what analysts said was largely position squaring.

But they said the outlook for bond markets remained somewhat bearish because of an easing in U.S.-China trade tensions, a growing sense that the worst is over for the euro zone economy and a rush of new bond supply at the start of the new year. The United States and China, the world's two biggest economies, are just a day away from signing a Phase 1 trade agreement. In a sign of easing tensions, the U.S. Treasury said on Monday that China should no longer be designated a currency manipulator.

"There does appear to be some demand for European rates today, but over the course of the next six weeks we still reckon bearish forces will win out," said Peter Chatwell, head of rates strategy at Mizuho. "Data is marginally improving and that should set the buying tone in credit spread products versus rates."

Economic growth and inflation in the euro zone are showing "good signs of stabilisation" after a slowdown, European Central Bank board member Yves Mersch said on Tuesday. The ECB holds its first meeting of the year next week.

Germany's benchmark 10-year bond yield was down almost 2 basis points at -0.21%, having briefly touched its highest level in almost two weeks at -0.188%. Most other 10-year bond yields in the bloc were down around 1-2 bps on the day .

"You had some good news in terms of China coming off the list of currency manipulators and so you would have expected bond prices to extend losses," said Andy Cossor, a rates strategist at DZ Bank in Frankfurt. "So, I think it might be a case that people got ahead of themselves yesterday and are covering short positions." Hefty supply was also expected to limit any bond markets price gains. Bond yields and prices move in the opposite direction.

Spain was set to sell a new 10 billion euro, 10-year bond on Tuesday, attracting one of the largest ever order books for such a sale from a sovereign issuer. The strong demand for the new Spanish bond comes in a week that has seen a hefty level of new bond supply from across the euro zone, including Cyprus launching a syndication, while Spain's southern European peer Italy held its first auction of the year.

Another source of potential headwind for the bond market were market gauges indicating a mild pick-up in price pressures. An important market gauge of long-term euro zone inflation expectations rose to its highest level since July at 1.36%.


TRENDING

OPINION / BLOG / INTERVIEW

Turbulence surrounding tobacco control in Ghana

... ...

Smart healthcare: IoT redefining the way healthcare is delivered

As the world is embracing the new wave of digitalization triggered by the pandemic and the arrival of 5G, the adoption of IoT devices will further boom. With adoption set to soar, IoT security issues and other challenges cant be ignored any...

Refugee compassion and response: Ideas to mitigate disasters now and in their future

Their homeland becomes a forbidden territory for them and more likely than not, their journey to foreign soil is no less traumatizing, not to say deadly. It is crucial to help refugees live a life of dignity and purpose....

Inadequate water infrastructure causes a tidal wave of coronavirus in rural Alaska

... ...

Videos

Latest News

INTERVIEW-Widow of murdered LGBT+ politician in Brazil vows to combat hate with election win

By Sydney Bauer Nov 26 Thomson Reuters Foundation - Two years after the murder of popular Brazilian councilwoman Marielle Franco, her partner Monica Benicio has also won a council seat and vowed to fight for justice and LGBT rights.Franco, ...

No place for outsiders who come during polls and incite violence: WB CM Mamata Banerjee

West Bengal Chief Minister Mamata Banerjee on Thursday said that there is no place for outsiders who come to the state during elections and incite violence. There is no place for outsiders in Bengal who come only during elections to incite ...

EU considering stopgap measure for UK financial services post Brexit, says EU diplomat

European Union assessments of whether to grant market access for banks and other financial firms from Britain will not be completed in time for January and stop-gap measures are being considered, an EU diplomat said on Thursday. Britains un...

Prakash Javadekar unveils e-compendium of articles on Constitution Day

Union Minister for Information and Broadcasting Shri Prakash Javadekar unveiled an e-compendium of articles on the Constitution, Fundamental Rights and Fundamental Duties here today.Speaking on the occasion the Minister said the compendium ...

Give Feedback