German Yields Hit Record Lows

German 10-year bond yields fell to a record low on Thursday as disappointing economic data from the euro zone’s two largest economies bolstered bets the European Central Bank will have to ease policy again.

The German economy shrank by 0.2 percent between April and June, its first contraction in more than a year as foreign trade and investment weighed on growth. It had been forecast to stagnate, according to a Reuters poll..

The French economy flatlined, undershooting forecasts for growth of 0.1 percent.

The data fuelled concern an already patchy economic recovery in the euro zone was hitting the skids, with many in the market saying a lack of improvement in the second half of the year would increase pressure on the ECB to print money via a quantitative easing (QE) programme to stimulate growth.

German 10-year yields, the benchmark for euro zone borrowing costs, fell 2 basis points to 1.012 percent, an all-time low. French 10-year yields were down by a similar amount at 1.41 percent, within sight of a record low of 1.399 percent hit two weeks ago.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza