Ten-year Bunds bought with negative yield

Wednesday, 13. July 2016 12:34

German government sold debt maturing in 2026 at a yield of 0.05% under zero on Wednesday. The round of benchmark treasuries of €4.04 billion is the first for which investors will receive less than they paid, due to deflation pressures and market instability. There was only €1.32 billion in competitive bids for the zero-coupon securities, while overall demand was €4.78 billion, Bundesbank said.

Market sentiment has turned to fixed income and precious metals, looking for safe havens in the runup to the Brexit referendum last month. Today's auction by the German Finance Agency comes after last week 10-year Bunds have traded at a record low yield of minus 0.2%.

In the meantime, spreads against the bonds of troubled Eurozone countries such as Italy have been swelling, and traders are contemplating prospects for more stimulus and monetary easing from major central banks.

Image: EPA / Matteo Bazzi

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