Left Menu
Development News Edition

UPDATE 2-Euro zone bond yields slide on Brexit and trade fears

Reuters | Updated: 17-05-2019 18:56 IST | Created: 17-05-2019 18:27 IST
UPDATE 2-Euro zone bond yields slide on Brexit and trade fears
Image Credit: Pixabay

German bond yields fell back towards 2-1/2 year lows on Friday as the collapse of Brexit talks in Britain boosted higher-rated debt and worsened a mood among investors already nervous about trade tensions.

Both French and Dutch 10-year government bond yields touched 2-1/2 year lows and there was some respite for Italian bonds, with those yields down as much as six basis points. Analysts said this was more down to position-covering ahead of the weekend than any major easing in concern about Italian risks, however.

Talks between Britain's two biggest parties over a Brexit deal collapsed, reviving doubts whether Britain can avoid leaving the European Union without a deal. The opposition Labour party blamed Prime Minister Theresa May's crumbling government, and investors are now bracing for a contest to succeed her.

"It's the additional uncertainty that's been injected into the market as a result of the likely leadership campaign and the real lack of clarity about what that means for Brexit," said Sarah Hewin, an economist at Standard Chartered, pointing to the renewed prospect of a no-deal Brexit and a possible national election. The 10-year British government bond yield dropped six bases.

Adding to the nervousness, rising trade tensions between the United States and China, the world's two biggest economies, have fuelled concern about global growth. Tough words on trade from China's media on Friday drowned out upbeat news on the U.S. economy and corporate earnings, U.S. Treasury yields, which rose on Thursday after the strong U.S. data, also fell.

French and Spanish 10-year bond yields were set for their biggest weekly drop in around two months, down nine and 13 bps respectively. There have been steep falls in yields across major bond markets this year as weaker global growth and a shift to a more dovish stance from central banks creates a favourable backdrop for fixed income.

"Bond markets in general, especially (German) Bunds, are telling us they don't see many good things going on in the next one (to) two years," said Neil Dwane portfolio manager and global strategist at Allianz Global Investors. Renewed concern about Italy, the euro zone's third-biggest economy, has also fuelled the demand.

Deputy Prime Minister Luigi Di Maio said on Friday he was not worried over possible EU sanctions in case of a violation of fiscal rules, as he was confident European leadership would change after this month's European Parliament elections. Investors have been on edge since Deputy Prime Minister Matteo Salvini said on Tuesday that Rome should be ready to break an EU deficit ceiling of 3% of gross domestic product and push debt to 140% of GDP if needed to fight unemployment.



‘Discounted Deaths’ and COVID 19: Anthropology of Death and Emotions

Death is a social event rather than the mere cessation of biological functions. As seen by anthropologists, death is not just physical but intensely social, cultural, and political....

Indigenous knowledge of communities a must for maximizing impact of community work

Generally, it has been observed that the majority of the academicians in higher education institutions neglect the wisdom of community people and throw their weight around thinking that they know everything and the community knows nothing. ...

In rebuking FBR, Pakistan’s courts take a stand for public health

The system, if implemented effectively, will allow Pakistans revenue service to combat the illicit trade in tobacco products and potentially add hundreds of millions of dollars to the states budget each year. ...

Dissecting how COVID-19 is catalyzing the trajectory of New World Order

The ensuing pandemic of COVID-19 has hit the globalization in two ways firstly, shrinking the importance of globalization as an economic force by curtailing mobility through worldwide lockdowns, and secondly, rejuvenating the idea of indig...


Latest News

UK trials remdesivir treatment for CoVID-19 as UK PM aide row rages on

The UK government on Tuesday confirmed the launch of a new trial for selected coronavirus patients of remdesivir, a drug which is believed to shorten the recovery time from COVID-19. This is probably the biggest step forward since the coron...

Mumbai airport handles 44 flights on Day 2

AAI-GVK group-run Mumbai airport continued to have curtailed operations for the second day on Tuesday operating a total of 44 flights with 22 departures and an equal number of arrivals. The Mumbai International Airport Ltd while announcing ...

UP govt transfers 10 senior IPS officers

The Uttar Pradesh government transferred 10 senior IPS officers on Tuesday. A statement issued here by Additional Chief Secretary Home Awanish Awasthi said, Additional Director General Law and Order PV Ramasastry has been made the Additiona...

PM Modi, Austrian prez agree on importance of global collaboration to deal with COVID-19 pandemic

Prime Minister Narendra Modi and Austrian President Alexander Van der Bellen on Tuesday agreed on the importance of international collaboration to deal with the present challenges posed by the coronavirus pandemic. Had a good discussion wit...

Give Feedback