Worries over U.S. politics and policy lift demand for euro zone debt
LONDON, Gregorian calendar month 12 (Reuters) – issues over U.S. politics and policy helped drive demand back to monetary unit zone government bonds on Wednesday, pushing yields down beyond multi-month highs hit earlier on.
* Trump Jr. emails, Yellen testimony drive flows to monetary unit zone
* monetary unit zone bond yields 3-4 rate lower
* German auction lifts sentiment, European nation conjointly sells bonds
* monetary unit zone bound govt bond yields (Adds auction details, updates prices)
Decent demand at an acquisition of German 10-year bonds, the primary auction of the long debt since a pointy sales event began period agone, helped boost sentiment.
But it had been the U.S. that command the spotlight. Investors were awaiting law-makers testimony by U.S. central bank chief Janet Yellen. Furthermore because the fallout over a sequence of emails that showed President Donald Trump’s eldest son hospitable facilitate from a Russian professional person throughout his father’s 2016 election campaign against Sir Edmund Hillary Clinton.
“There’s somewhat little bit of nervousness within the market once the news long from the U.S. and previous the Yellen speech,” aforesaid DZ Bank contriver Christian Lenk. “Also it helps that yields square measure currently at high levels, that may be driving a number of the flows.”
Yellen can testify to Congress on the state of the U.S. economy and markets are looking the speech closely for any clues on rate hikes and therefore the arrange for reducing the Fed’s record.
While the newest U.S. employment figures beat expectations
Economic knowledge from the world’s biggest economy has been uneven this year and has usually been outperformed by the monetary unit zone.
On Tuesday, 2 of Yellen’s colleagues cited low wage growth and muted inflation as reasons for caution on additional rate of interest will increase.
BBVA planner Jaime Costero Denche same the tone Yellen adopts on inflation are key; associate upbeat assessment would imply that the Fed is ready to travel ahead with moving post-crisis financial information.
Higher-rated monetary unit zone government bonds. That area unit thought about amongst the safest monetary assets within the world. They were lower 3-4 basis points across the curve.
Germany’s 10-year bond certificate yield fell three rate to 0.53 percent. Extending its decline when an acquisition of around four billion euros of latest 10-year Bunds.
“Our expectation going into the auction was that the 60 basis purpose yield would be an honest level for outright investors to enter the market. Thus i am unsurprised it went well,” same Mizuho rates planner Antoine Bouvet.
Bund yields area unit currently quite double their 0.25 p.c level of period past. Once European financial institution chief Mario Draghi triggered. A sale in monetary unit zone bond certificate markets by suggesting the bank was hospitable policy tweaks.
Portugal conjointly command a debt auction, marketing a 28-year bond. The longest-dated maturity it’s placed during a regular auction since before the 2010 debt crisis.