Bund, gilt yields climb with German fiscal boost hint

Monday, 19. August 2019 12:22

The most closely watched government debt securities sold off on Monday and yields continued to strengthen after last week's powerful shift in sentiment on a global scale. Investors showed hunger for risk assets as officials from the central banks of the United States and the Eurozone indicated they are willing to lower borrowing costs, while Germany's Minister of Finance Olaf Scholz has surprised the markets by apparently breaking ranks with the cabinet with regard to fiscal discipline. He said a public spending package of up to €50 billion would be rolled out if it is necessary to protect the economy.

Yields, which have slumped to historic lows again on August 16, were also underpinned by China's upcoming corporate tax reform. The United Kingdom's gilt yield curve remained inverted unlike with US Treasury securities. The German two-year rate advanced to a negative 0.902% at 12:19 pm CET. The ten-year Bund yield surged 4.6 basis points to minus 0.638% and the 30-year gauge strengthened 8.6 points to 0.133% under zero. Corresponding futures retreated 0.02%, 0.53% and a stunning 2.36%, respectively.

The British yields on debt due in two, ten and thirty years jumped 2.1 points to 0.528%, 3.8 to 0.506% and 7.3 points to 1.083%, respectively.

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