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German 10-Year Bond Yields Hold below 13-Month Highs

LONDON, May 4 (Reuters) - Most 10-year government bond yields in the euro area were steady on Tuesday, holding below 13-month highs on hopes that world central banks will not rush into tapering their massive stimulus schemes.

New York Fed President John Williams said late on Monday that the recovery so far is “not nearly enough” to prompt monetary policy tightening.

Australia’s central bank left its key rates at near zero for a fifth straight meeting on Tuesday and pledged to keep policy super loose for a prolonged period even as the economy recovers at a rapid pace from the COVID-19-led downturn.

And in the euro area, analysts said signs of a pick up in European Central Bank bond buying were a positive sign for regional markets.

Data on Monday showed 80 billion euros was bought under the ECB’s PEPP emergency stimulus scheme in April, the first full month after the higher pace was announced in March. That compared with 60 billion euros in February.

ECB chief Christine Lagarde has suggested markets focus on the monthly numbers rather than weekly purchase figures, which can be volatile.

“The brisk volumes in the ECB purchase data may have added to the bullish sentiment,” said Christoph Rieger, head of rates and credit research at Commerzbank, referring to the pull back in euro area yields late on Monday.

In early Tuesday trade, Germany’s 10-year Bund yield was little changed around -0.20%, off more than one-year highs touched on Monday at -0.16%.

French and Dutch 10-year yields were also off one-year peaks, while Italian borrowing costs were a touch lower at 0.83% , with the gap over German Bunds at its narrowest in around a week at 102 bps.

“We should expect the ECB to continue to buy PEPP assets at that 80 billion monthly pace ahead of the 10 June meeting,” analysts at Daiwa said in a note.

Reporting by Dhara Ranasinghe; Editing by Kirsten Donovan

Source: Reuters


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