German Bond Yields Headed for Lows as ECB Fuels Euro-Debt Rally
- With just four days packed with economic data and the European Central Bank set to begin its expanded debt...
With just four days packed with economic data and the European Central Bank set to begin its expanded debt purchases, German government bonds look to extend their advance next week.
Signals from policy makers including ECB Chief Economist Peter Praet that the central bank could cut interest rates further have helped push bond yields lower. That’s even as the euro-area’s annual consumer-price inflation rate is forecast to rise to minus 0.1 percent in March, according to analysts surveyed by Bloomberg. Benchmark German 10-year bund yields will drop to zero next quarter, according to Commerzbank AG, ranked as the top dealer by the nation’s debt agency.
“Inflation is still too low for the ECB,” said Rainer Guntermann, a fixed-income strategist at Commerzbank in Frankfurt. “What we already saw from the ECB over the past week was more outspoken rhetoric with regard to the possibility of rate cuts. And we’ve got much more aggressive ECB policy about to start in April. Spreads across the board will most likely test the lows from last year and even bund yields, given the scarcity.”
Germany’s 10-year bund Yield Yield A yield is defined as the earnings generated by an investment or security over a particular time period. This is in typically displayed in percentage terms and is in the form of interest or dividends received from it.Yields do not include the price variations, which differentiates it from the total return. As such, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as a A yield is defined as the earnings generated by an investment or security over a particular time period. This is in typically displayed in percentage terms and is in the form of interest or dividends received from it.Yields do not include the price variations, which differentiates it from the total return. As such, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as a Read this Term fell three basis points, or 0.03 percentage point, in the four days through March 24, to 0.18 percent as of the 5 p.m. London close. That’s about 13 basis points from its record-low 0.049 percent posted in April 2015. The 0.5 percent security due in February 2026 rose 0.315, or 3.15 euros per 1,000-euro ($1,117) face amount, to 103.135.
Europe’s bond markets are closed March 25-28 for the Easter holiday.
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editors responsible for this story: David Goodman at dgoodman28@bloomberg.net, Keith Jenkins, Paul Armstrong
By: Lucy Meakin
©2016 Bloomberg News
With just four days packed with economic data and the European Central Bank set to begin its expanded debt purchases, German government bonds look to extend their advance next week.
Signals from policy makers including ECB Chief Economist Peter Praet that the central bank could cut interest rates further have helped push bond yields lower. That’s even as the euro-area’s annual consumer-price inflation rate is forecast to rise to minus 0.1 percent in March, according to analysts surveyed by Bloomberg. Benchmark German 10-year bund yields will drop to zero next quarter, according to Commerzbank AG, ranked as the top dealer by the nation’s debt agency.
“Inflation is still too low for the ECB,” said Rainer Guntermann, a fixed-income strategist at Commerzbank in Frankfurt. “What we already saw from the ECB over the past week was more outspoken rhetoric with regard to the possibility of rate cuts. And we’ve got much more aggressive ECB policy about to start in April. Spreads across the board will most likely test the lows from last year and even bund yields, given the scarcity.”
Germany’s 10-year bund Yield Yield A yield is defined as the earnings generated by an investment or security over a particular time period. This is in typically displayed in percentage terms and is in the form of interest or dividends received from it.Yields do not include the price variations, which differentiates it from the total return. As such, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as a A yield is defined as the earnings generated by an investment or security over a particular time period. This is in typically displayed in percentage terms and is in the form of interest or dividends received from it.Yields do not include the price variations, which differentiates it from the total return. As such, a yield applies to various stated rates of return on stocks, fixed income instruments such as bonds, and other types of investment products.Yields can be calculated as a ratio or as a Read this Term fell three basis points, or 0.03 percentage point, in the four days through March 24, to 0.18 percent as of the 5 p.m. London close. That’s about 13 basis points from its record-low 0.049 percent posted in April 2015. The 0.5 percent security due in February 2026 rose 0.315, or 3.15 euros per 1,000-euro ($1,117) face amount, to 103.135.
Europe’s bond markets are closed March 25-28 for the Easter holiday.
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editors responsible for this story: David Goodman at dgoodman28@bloomberg.net, Keith Jenkins, Paul Armstrong
By: Lucy Meakin
©2016 Bloomberg News