German, UK bonds jump on pessimism over trade

Tuesday, 07. May 2019 18:05

The worsening of the economic outlook acknowledged by the European Union on Tuesday in a quarterly update impacted sentiment in the markets on top of ongoing concerns about the fate of bilateral trade negotiations between the United States and China. Prices of government securities issued by Germany and the United Kingdom surged, which means yields fell. Benchmark sovereign debt in Europe outperformed US Treasuries.

The Japanese yen, another safe haven asset, also benefited, while gold advanced modestly, against a decline in other precious metals. Traders are also showing caution about the prospects of success regarding the initiative for a joint Brexit platform by the UK government and the opposition Labour Party.

The German two-year yield was 0.7 basis points lower at 0.594% in negative territory at 6:00 pm CET. The ten-year rate plunged 4.6 points to 0.035% below zero, looking at a year-to-date low, compared to the drop of 4.4 points to 0.616% for the 30-year maturities. Corresponding futures rose by 0.02%, 0.47% and a stunning 0.99%, respectively. The yield on British debt maturing in two, ten and 30 years dropped five points to 0.756%, 6.2 points to 1.16% and 5.6 points to 1.678%, respectively.

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