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Eurozone government yields dip, key on U.S. payrolls

On Friday eurozone government bond yields edged lower as investors concentrated on the impact U.S. taxes may have on the EU economy and purchased risk-off government bonds.

ecbPhoto: Flickr

Bonds began to rally on Thursday, after the U.S. stated on Wednesday it would force 10 percent taxes on European-made Airbus planes and 25 percent tariffs on European goods, for example, French wine, as punishment for unlawful EU airship subsidies.

An eurozone bond rally had slowed down before during the week—while U.S. Treasury yields fell — as concern developed that the ECB had restricted space to support development and inflation. Yet, horrid financial information in the U.S. restored fears of the downturn and pushed the eurozone yields down.

In morning exchange, 10-year bond yields over the bloc tumbled 1 to 2 bps. Benchmark German 10-year Bund yields were down 1.8 basis points at minus 0.59 percent.

Investors will watch whether eurozone yields tumble further on Friday by a U.S. non-farm payrolls report that comes in tighter than anticipated, raising anticipations the Fed will slice borrowing costs by 25 bps toward the end of October.

That would push down eurozone yields, yet the drop would just be transitory.

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