Eurozone yields near recent lows as weak US data, virus cases boost safe-haven appeal

[BRUSSELS] Eurozone bond yields held near recent lows on Tuesday, as risk sentiment was hurt by subdued US economic data and rising cases of the Delta variant of the coronavirus.

Data from the Institute for Supply Management on Monday showed US manufacturing slowed in July for the second straight month. That sent 10-year US Treasury yields below the critical 1.20 per cent level and they held below it in early London trade on Tuesday.

Bond yields move inversely with prices.

Sentiment was also weakened by a rise in fresh cases of the coronavirus' Delta variant, denting stock markets and supporting safe-haven currencies like the Swiss franc and the yen.

The rally in US Treasuries, which are closely correlated with euro area bonds, pushed yields lower too on Monday and markets remained supported on Tuesday.

Germany's 10-year yield, the benchmark for the eurozone, fell to a new low since early February at -0.486 per cent. It was last up less than a basis point to -0.47 per cent by 0700 GMT.

Its 30-year yield, which turned negative and sent the whole German yield curve into negative territory on Monday, was hovering around 0 per cent.

With little data coming out of the euro zone, focus was on June factory and durable goods orders data out of the US on Tuesday.

The data is "not something we expect could upset the current status quo of falling yields in illiquid markets," ING analysts wrote in a note.

REUTERS