German yields hit record lows amid GDP decline

Wednesday, 14. August 2019 08:47

The Eurozone's largest economy contracted marginally as expected in the second quarter, posting the second negative result in a year, which underpinned buying pressure in the market for government bonds. The rise in prices of Germany's sovereign debt resulted in new record lows for yields in a string of all-time records and persistent flattening of the curve as the country is increasingly in a risk of recession. Gross domestic product declined 0.1% in the three months through June but with minor upward revisions for earlier data.

Adding to the concerns among investors were disappointing updates on growth in fixed asset investment, industrial production and retail sales in China, Germany's third-biggest export market. Stocks were still looking to rise slightly on the opening bell amid the euphoria about the truce in the trade war between the most populous nation and the United States, but equity indicators underperformed those in the rest of Europe.

The German two-year yield retreated modestly to a negative 0.877% at 8:45 am CET. The benchmark ten-year Bund rate dipped 1.2 points to 0.617% under zero after touching 0.62% for the first time. The yield on the 30-year state bonds slipped to minus 0.139% following an all-time record low at 0.147%. Equivalent futures gained 0.01%, 0.07% and 0.09%, respectively.

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