German, UK bonds drop as stocks rebound

Friday, 04. January 2019 09:35

Equities in Europe clawed back the previous day's losses on Friday, showing risk appetite, which was also evident by a selling spree affecting sovereign debt securities. Benchmark German and British bonds mostly declined, which means yields increased on the assets, which are considered to be generally safer. Market participants were relieved to hear the confirmation that the United States and China are about to start direct negotiations with the aim to overcome friction which led to a trade war. Yet, stability will be tested next week, when lawmakers in the United Kingdom convene to decide the fate of the deal about the withdrawal from the European Union.

The UK's two-year yield grew 2.5 basis points to 0.726% at 9:31 am CET. The 10-year gilt yielded 1.102% or 3.5 points more for the day, compared to an advance of 2.8 to 1.778% for the 30-year maturity.

The yield on the German two-year note was little changed at a negative 0.612%. The measure of the ten-year Bund was up 1.9 points at 0.174%, while the 30-year bond yielded 0.822%, which was 2.2 points above the previous close. Corresponding futures prices slipped 0.02%, 0.28% and 0.6%, respectively. On the flipside, Italian government bonds rallied, taking back a chunk of losses from the previous session.

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