German, Italian bonds rally as Conte to resign

Tuesday, 20. August 2019 17:43

The most widely watched government securities in the Eurozone surged on Tuesday, knocking yields down as Italy's political crisis culminated by the announcement from Prime Minister Giuseppe Conte that he would go to President Sergio Mattarella as his cabinet has "probably" reached its end. Stocks tumbled, where risk-off sentiment strengthened further with the impasse in communication between the United Kingdom and the leaders of the rest of the European Union regarding Brexit.

New Prime Minister Boris Johnson insisted again that his country would crash out of the bloc without a deal if the administration in Brussels doesn't give up on the so-called Irish backstop. Outgoing European Council chief Donald Tusk responded by saying the hard border would be reintroduced in that case.

Germany's two-year yield slipped to a negative 0.903% at 5:40 pm CET. The ten-year Bund rate tumbled 4.1 basis points to 0.689% under zero. The yield on the 30-year bonds fell 3.5 points to minus 0.178%. Corresponding futures gained 0.01%, 0.4% and 0.78%, respectively. Italy's benchmarks nosedived 8.3 points to 0.011%, 7.8 to 1.346% and 1.5 points to 2.407%. The FTSE MIB stock index closed 1.11% in the red in Milan.

The UK's gilt yields for maturities of two, ten and thirty years were down by 0.2 points at 0.488%, one point at 0.458% and 3.3 points at 1.016%, respectively.

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