German bonds advance as stocks pare most gains

Monday, 12. August 2019 11:44

Following an initial move higher on Monday in the European session, markets returned to caution mode as traders cashed in on a rise in equities and turned to benchmark government debt for safety. Gold rebounded amid haven demand with the focus on the lack of progress in talks between the United States and China on bilateral trade.

Closer to home, Italy was bracing for the possibility of snap elections. Deputy Prime Minister Matteo Salvini and his Northern League halted the cooperation with the Five Star Movement, the senior partner, and indicated the public deficit target should rise to 2.8% to circumvent a rise in the value-added tax. Yields on the state's 10-year bonds fell 4.8 basis points to 1.769%.

Germany's two year note yield retreated to a negative 0.868% after reaching 0.878% for the first time in 29 months. The ten-year benchmark was down 1.7 points at 0.589% below zero, near last week's record low, compared to the fall of 1.8 points to 0.087% under the neutral level for the 30-year bonds. Corresponding futures were 0.02%, 0.2% and 0.6% higher, respectively. Equivalent British yields pared most gains to come in at 0.446%, 0.49% and 1.172%, respectively.

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