German Bonds Increase on Inflation Slowing

Germany’s government bonds rose for the first time in three days as consumer prices in Europe’s largest economy unexpectedly slowed in October, boosting demand for the euro area’s benchmark fixed-income sovereign debt.

Greece’s securities tumbled, with 10-year yields jumping the most in two weeks, as Minister of Administrative Reform Kyriakos Mitsotakis said investors face more volatility. Italy’s bonds advanced after the nation sold five-year debt at the highest average yield since June. Securities from France to Finland also rose.

“Germany is sliding into deflation,” said Alessandro Giansanti, a senior rates strategist at ING Groep NV in Amsterdam. “That would have very negative consequences for the whole euro zone, so that’s bullish for bunds. There are political risks due to new elections coming in Greece. That’s quite enough to keep investors worried.”

Bloomberg

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