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U.S. Stimulus Optimism Pushes German Yields to One-Week High

AMSTERDAM, Oct 21 (Reuters) - German 10-year bond yields rose to their highest in a week on Wednesday as hopes for a U.S. stimulus deal boosted risk appetite and dented demand for safe-haven assets.

The White House and Democrats in the U.S. Congress moved closer to agreement on a new coronavirus relief package on Tuesday as president Donald Trump said he was willing to accept a large aid bill despite opposition from his own Republican Party.

That supported stock markets and pushed the dollar to its lowest in a month against a basket of currencies.

“(Democratic House Speaker Nancy) Pelosi and (Treasury Secretary Steve) Mnuchin were said to have made good progress in stimulus talks, boosting risk-assets and seeing rates weaker overnight,” Mizuho analysts told clients.

Ten-year Bund yields rose to -0.571% and were last up 2 basis points on the day. Similarly, U.S. Treasuries had risen to their highest since June.

Investors will be watching for comments from European Central Bank President Christine Lagarde and chief economist Philip Lane, due to speak at an event from 0730 GMT.

Some attention is also on Italy, which said on Tuesday that bond issuance in coming months would be down more than 30% compared to last year, given the amount of liquidity it has to hand.

The debt management office also said it will issue a new dollar-denominated bond this year. Rome is also finalising the framework for its first green bond but it has yet to decide if that will be sold this year or at the beginning of 2021.

In the primary market, Greece was re-opening a 15-year bond via a syndicate of banks, according to a lead manager notice seen by Reuters. (Reporting by Yoruk Bahceli; editing by John Stonestreet)

Source: Reuters

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