German Bunds rally as yields hit record lows

Monday, 05. August 2019 18:25

Investors remained hungry for safe haven assets on Monday amid the spillover of the trade war between the United States and China into foreign exchange. Together with precious metals, the yen and the Swiss franc, Germany's government debt securities surged in price . The movement was less drastic than with US Treasuries but the buying wave hitting Bunds managed again to reduce some of the yields to the weakest levels ever as they held in negative territory across all maturities toward the end of the trading day.

The two-year German yield was two basis points down at 0.807% below zero after hitting a two-and-a-half-year low of just 0.2 points deeper. The 10-year rate declined 1.9 points to 0.513% in negative territory following a dip to an all-time record of minus 0.536%. The yield on the 30-year federal bonds tumbled 1.5 points to 0.011% under the neutral level while early in the session it reached five points less for the first time. Corresponding futures jumped 0.06%, 0.2% and 0.35%, respectively.

The United Kingdom's two-year yield advanced 1.2 points to 0.433% amid the reluctance in the Bank of England to lower short-term borrowing costs. The 10-year benchmark was down 3.7 points at 0.515%. The session low, 0.492%, was never seen before. It compares to the fall of 5.1 points to 1.193% for the 30-year bonds after the yield fell to a record 1.18%.

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