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Eurozone govt bond yields down on economic worries


EUROZONE government bond yields held near recent lows on Monday on concerns over European and global economic growth and at the start of a hefty week of European sovereign debt redemptions.

In a market preoccupied with the implications of a potential trade war between the United States and China on global growth, safe haven European government bonds such as German Bunds are proving a popular investment.

Although US President Donald Trump expressed some optimism over the weekend, the world's two largest economies have threatened each other with tens of billions worth of tariffs in recent days and Chinese officials have said that this is not the time for negotiations.

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As a result, Germany's 10-year government bond yield is continuing to hover around the 0.5 per cent level, far below the year's highs of 0.81 per cent.

"It looks like we've reached a steady state for the European market, more particularly for the Bunds," said Commerzbank strategist Rainer Guntermann. "Investors are just not willing to reduce duration given the concerns about the slowdown in the global economy."

Most eurozone bond yields - which move inversely to price - are now close to multi-month lows; and on Monday, they were flat to a touch lower at the start of one of the biggest weeks for redemptions in Europe. Commerzbank estimated that around 60 billion euros (S$96.6 billion) of European government bonds are due to mature this week. Given that there is only around 13 billion euros of supply to counter this, yields are unlikely to rise much, analysts said. REUTERS