German, UK bonds shift to losses on improved data

Thursday, 22. August 2019 14:30

Risk appetite recovered in the markets on Thursday, offering a short-term relief for stocks while safe haven assets suffered. Sovereign bonds of Germany and the United Kingdom pared gains and dropped, sending yields strongly higher, and gold and silver traded in the red. Investors were encouraged by a rise in manufacturing in France in preliminary data gathered by IHS Markit, which would mean last month's contraction was more than offset. At the same time, the reports showed the declines in Germany and the Eurozone have eased.

French President Emmanuel Macron and British Prime Minister Boris Johnson agreed the Brexit impasse must be solved much before withdrawal, scheduled for October 31. The UK's new leader also expressed optimism "a good deal" can be reached. Stocks traded in positive territory.

Germany's two-year note yield jumped 4.4 basis points to a negative 0.841% at 2:27 pm CET. The ten-year benchmark surged 4.6 points to minus 0.624% compared to the 5.7-point rally in the 30-year rate to 0.115% below zero. Corresponding futures prices 0.09%, 0.52% and 1.21%, respectively. Yields on Britain's debt due in two, ten and thirty years were up by 2.3 points at 0.524%, 5.1 at 0.526% and 4.9 points at 1.077%, respectively. Treasury yields also recovered.

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