German Bunds Keep Falling But Avoid Negative Rates

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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