German Bund Yield Approaches One-Week Low Amid Euro-Area Discord

German 10-year government bonds yields approached the lowest in more than a week amid renewed discord among European leaders over ways to bring an end to the region’s debt crisis.

Bunds held their rally from last week, when the yield dropped 11 basis points, the most in a month. German Chancellor Angela Merkel and French President Francois Hollande clashed on a timetable for starting joint oversight of Europe’s banks, underlining tension between the two countries. Two-year notes slipped before a report economists said will show German business confidence climbed for the first time in six months in September. Italian and Spanish bonds dropped.

“Any time anyone with different priorities starts to get together and really drill down to what needs to be done, you end up with these differences of opinion, which just remind everyone how far we are away from a solution,”said John Wraith, a fixed- income strategist at Bank of America Merrill Lynch in London. “The bund remains the intra-euro-zone safe haven asset of choice.”

Germany’s 10-year yield fell one basis point, or 0.01 percentage point, to 1.59 percent at 8:15 a.m. London time. It dropped to 1.56 percent on Sept. 20, the least since Sept. 13. The 1.5 percent bond due in September 2022 rose 0.08, or 80 euro cents per 1,000-euro ($1,296) face amount, to 99.2.

The two-year note yield climbed almost two basis points to 0.05 percent.

Via – Bloomberg


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