Monday, January 17

Brighter mood in world markets pushes up euro zone debt yields

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LONDON — Government bond yields across the euro area nudged higher on Tuesday, pulling away from recent lows as a brighter tone in world markets dented the appeal of fixed income.

Still, with European Central Bank (ECB) president Christine Lagarde and US Federal Reserve chief Jerome Powell scheduled to speak later in the day, trading was largely subdued.

Germany’s benchmark 10-year bond yield was about a basis point higher on the day at around -0.50%. It is up more than 5 basis points from two-month lows hit last week.

News that US President Donald Trump was discharged from hospital following treatment for COVID-19 and prospects for a fresh US stimulus package boosted sentiment in world markets, and in turn weighed on safe-haven debt.

“The lack of key data releases will keep attention focused on Trump’s recovery, following news of his imminent release from hospital late Monday,” analysts at Miuzuho said in a note.

“On the back of this, the risk-on could have further to travel. Any signs of progress on fiscal stimulus talks would also help.”

Most other euro zone bond yields were marginally higher on the day, with Italy’s 10-year bond yield also nudging off recent lows to stand at 0.81%.