German, UK bonds dip on loosened rate outlook

Friday, 23. August 2019 12:30

The Chinese yuan's weakening fell out of focus in the immediate term on Friday as investors were bracing for a keynote speech by United States Federal Reserve Chair Jerome Powell. Stocks advanced and benchmark sovereign debt securities mostly dropped, lifting longer-term yields. The equivalents of commercial borrowing costs have halted their plunge, but remained negative or near inversion in the key section as numerous central bankers from Washington downplayed the prospect of massive easing.

Sentiment was also affected by cautious optimism expressed regarding the possibility of a Brexit deal by the United Kingdom's Prime Minister Boris Johnson, France's President Emmanuel Macron and German Chancellor Angela Merkel. Of note, Italian lawmakers are under a tight deadline set by President Sergio Mattarella to form a majority after the ruling coalition collapsed.

German two-year yields were little changed at a negative 0.868% at 12:23 pm CET. The ten-year rate advanced a little to minus 0.635% and the yield on the 30-year bonds jumped 2.7 basis points to 0.111% below zero. Corresponding futures added just 0.02% and fell 0.06% and 0.5%, respectively. The UK's yields rose by 1.5 points to 0.536%, 3.5 to 0.555% and 4.6 points to 1.133%, respectively.

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