German Bunds Keep Falling But Avoid Negative Rates

April 17, 2015 Share Print 0

German Bund yields accelerated declines Friday, to trade just above zero percent, as investors eyed a move into negative territory.

Yields on benchmark 10-year Bunds fell as low as 0.051 percent, from a close of 0.085 percent on Thursday, before pushing back up.

Yield declines started accelerating from Tuesday this week, before falling sharply on Friday. This has led to speculation that Germany could become the first euro zone country to have 10-year bond with a negative yield.

“Really, today could be well be the day (that yields turn negative),” Jennifer McKeown, European economist at Capital Economics, told CNBC Friday.

Bunds are viewed as a “safe-haven” asset, akin to the U.S. dollar, and prices have steadily rallied since the start of 2014. (Bond prices move inversely to yields.)

The sudden slump in Bunds on Friday was part of a broader market downturn, with all major euro zone stock indexes down 1 percent or more. The pan-European Stoxx Europe 600 traded around 1.4 percent lower.

via CNBC

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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.