Left Menu
Development News Edition

Easing tensions over German economy keep bond yields steady


Easing tensions over German economy keep bond yields steady
Bond yields in the bloc's top-rated economies have fallen sharply this year as a string of weak economic data and cuts to 2019 growth forecasts.

Eurozone government bond yields were mostly steady on Thursday, with data showing Germany just escaped recession in the final quarter of 2018 preventing a further drop in borrowing costs.

Bond yields in the bloc's top-rated economies have fallen sharply this year as a string of weak economic data and cuts to 2019 growth forecasts prompted investors to reassess both the economic and monetary policy outlook. But with negative news now priced into the market and benchmark German 10-year bonds yields trading close to their lowest levels in over two years, the bond market appeared to be on hold.

Germany's economy grew by 0.0 per cent quarter-on-quarter in the final quarter of 2018, data showed, compared with a Reuters forecast for growth of 0.1 per cent. It escaped recession by the narrowest of margins after contracting in the July-September period for the first time since 2015. "The whisper estimate was even lower, so that's why the immediate reaction was a rise in yields," said Norbert Wuthe, rates strategist at Bayerische Landesbank.

"There are basically two things weighing down yields at the moment -- Brexit uncertainty and, in the past six weeks, increased attention to negative data surprises and their possible repercussions for the ECB (European Central Bank). Germany's 10-year Bund yield was last trading at 0.12 per cent, little changed on the day, having briefly risen to 0.133 per cent after the data.

Most other 10-year bond yields in the bloc were flat to marginally lower on the day. The focus remained on Spain, where bond yields were broadly steady in early trade. Spain's parliament rejected a draft 2019 budget on Wednesday after Catalan separatists turned their back on the government, pushing the country close to an early national election. "Elections would not concern us in the long-term, as whether they take place or not, there is still uncertainty either way," said Peter McCallum, rates strategist at Mizuho.

He said snap elections would likely spark a sell-off in Spanish bonds, which should recover if fresh polls resulted in a centre-right coalition and a more market-friendly fiscal policy.

(With inputs from agencies.)

Download The Devdiscourse News App for Latest News.


TRENDING

OPINION/BLOG/INTERVIEW

Future of Food: Technology fostering the road to global food security

Technological innovation can help address most of the pressing issues facing the world today including food security by enhancing productivity, improving financial services, managing resources, addressing environmental concerns, etc....

Conspiracy theories on COVID 19: Legislators, Scientists, and Journalists all joined the Caravan

Conspiracy theories are not new for virus epidemics. There have been conspiracy theories on HIV-AIDS, Polio Vaccines, Ebola Virus, and several other diseases as well. However, what makes the 2019 Novel Coronavirus different from others is ...

Now it’s a war, Uganda deploys army to combat locust swarms

Its for the first time after 1986, the locust swarms have attacked Uganda twice in a season. With the increasing number of countries of Africa under attack by locust swarms, the problem seems to have taken a regional paradigm. Its very diff...

Top 10 Fake News, Myths and Realities on 2019 Novel Coronavirus COVID 19

With nearly 1500 deaths by January 14 and around 65,000 infections in China, the Novel Coronavirus 2019 has become one of the worst health epidemics of the 21st Century. However, 8,573 people have been cured but the rumor mongers are a...

Videos

Latest News

German minister: support for Laschet as CDU leader not directed against Merkel

German Health Minister Jens Spahn said on Tuesday that his support for Armin Laschet in running for the leadership of Angela Merkels party was not directed against the chancellor. Our offer is not directed against Angela Merkel, he told a n...

6 SC judges suffering from swine flu: Justice DY Chandrachud

As many as six Supreme Court judges are suffering from swine flu, Justice DY Chandrachud said on Tuesday. Justice Chandrachud made the comments at the Supreme Court.The judge informed the court that six judges were down with H1N1 virus, and...

Last marshal of the Soviet Union Dmitry Yazov dies

The last marshal of the Soviet Union Dmitry Yazov, who participated in a coup against then USSR leader Mikhail Gorbachev in 1991, has died, news agencies reported. Russias defense ministry said in a statement carried by agencies that Yazov ...

LG Anil Baijal outlines AAP govt's priorities in his address in Delhi Assembly

Lt Governor Anil Baijal on Tuesday addressed the first session of the 7th Legislative Assembly and outlined the Arvind Kejriwal governments priorities, including strengthening health and education services and making Delhi a world class cit...

Give Feedback