Euro zone bond yields rise; focus on coronavirus infections, supply - EntornoInteligente

Euro zone bond yields rise; focus on coronavirus infections, supply

euro_zone_bond_yields_rise_3B_focus_on_coronavirus_infections_2C_supply.png /

* Euro zone periphery govt bond yields

By Yoruk Bahceli

LONDON, May 12 (Reuters) – Euro zone bonds rose in early Tuesday trade as attention focussed on a rise in coronavirus infection rates.

The Chinese city of Wuhan, where the coronavirus pandemic originated, saw its first new cases since its lockdown was lifted, adding to concern easing restrictions may raise infection rates.

“… That would indicate there might be need to reverse some of the easing measures and of course that would be more restrictive regarding economic activity,” said DZ Bank rates strategist Andy Cossor.

German 10-year bond yields rose 3 basis points to -0.49%. . Most other yields also rose.

DZ Bank’s Cossor cited a break to a trendline on Bund future prices, with the future quoted below recent trends, which could put selling pressure on Bunds as technical traders would see it as a negative signal for bond prices.

Italian 10-year bond yields were down 1 basis point to 1.88%, after rising 10 bps during the previous session .

With a light data calendar in the euro zone, focus is on the primary market. Germany is due to sell 4 billion euros of new seven-year bonds and the Netherlands will add 1 billion to 3 billion euros to a 10-year bond.

Focus was also on the European Central Bank’s asset purchases, after data on Monday showed it had conducted its largest weekly purchases on record.

ECB executive board member Isabel Schnabel said the central bank will continue to act in the manner it sees fit, MNI News reported.

Talk of the potential for its Pandemic Emergency Purchase Programme to be increased show the ECB intends to ignore a decision on another bond-buying scheme, the Public Sector Purchase Programme, by the German Constitutional Court last week, Mizuho analysts told clients. The court ruled that the ECB must justify its PSPP bond purchases within three months or risk losing Germany as a participant.

German Chancellor Angela Merkel said on Monday that the situation can be resolved if the ECB explains the plan. (Reporting by Yoruk Bahceli)


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