German bonds jump on fears for manufacturing

Thursday, 18. April 2019 11:24

As an update to a closely watched survey of the private sector on Thursday showed a third monthly contraction in factory output in a row for the Eurozone, investors fled to longer-term government securities for safety. Prices of German debt soared, sending yields lower, with the effect spilling over to both the United Kingdom and across the Atlantic. The drop in manufacturing came in parallel with a slowdown in services growth, according to flash data for April released by IHS Markit, increasing concern about the possibility of a recession. Gold and silver rose moderately and the euro retreated.

The yield on two-year notes issued by the Federal Ministry of Finance in Berlin dipped slightly to a negative 0.572% at 11:24 am CET. The ten-year Bund rate fell 3.4 basis points to 0.049%, compared to a decline of 4.4 points to 0.694% for the 30-year bonds. Equivalent futures advanced 0.01%, 0.3% and a stunning 0.94%, respectively, as the yield curve flattened substantially. Yields on British debt maturing in two, ten and thirty years decreased 0.9 points to 0.784%, 1.9 to 1.218% and 1.5 points to 1.726%, respectively.

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