Bond yields in euro area on record lows as Lagarde is picked for ECB

Wednesday, 03. July 2019 10:05

Bond yields in the Eurozone hit record lows on Wednesday after the European Council announced it nominated the Christine Lagarde to replace Mario Draghi at the European Central Bank. Lagarde, who suspended her responsibilities as managing director of the International Monetary Fund during the nomination process, is not expected to differ greatly in policy compared to Draghi. The move in the bond market suggests that investors are pessimistic about growth and believe Lagarde.

Germany's 10-year Bund yield dropped to a record low of -0.40% as it declined by 0.03 basis points at 9:55 am CET. At the same time, the 2-year bond yield was at -0.78% and the 5-year bond yield was at a negative 0.67%. Their corresponding bond futures were up by 0.13%, 0.01% and 0.51%, respectively, at 10:03 am CET.

French 10-year government bond yields traded at -0.10%. Spanish and Belgian bonds dropped below zero for the first time ever and Italy's 2-year bond yield fell below zero for the first time in 14 months.

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