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.
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