Eurozone bond yields fall as vaccine optimism fades; focus on central banks
* Eurozone Periphery Government Bond Yields tmsnrt.rs/2ii2Bqr
AMSTERDAM, Nov. 12 (Reuters) – Eurozone bond yields fell on Thursday at the start of trading as caution replaced enthusiasm for COVID-19 vaccines, while attention also remained on the Central Bank European.
ECB President Christine Lagarde said on Wednesday the bank would focus on more emergency bond purchases and cheap loans in its new stimulus package, due in December. Yields fell after bond prices fell earlier in the week following the announcement of the Pfizer vaccine.
On Thursday, the German 10-year yield was down 2 basis points to -0.52%> at the start of the session.
UniCredit analysts noted that while European stocks have gained and surpassed their recent trading range on vaccine news, the Bund yield remains within its recent trading range and near its average since April.
“This suggests that (…) investors are carefully considering the implications of the vaccine on the economy,” they said in a note, adding that concerns about lockdowns could outweigh optimism about a future. vaccine.
The moves showed that the ECB’s key rate – at -0.50% – provides a level of support for the Bund benchmark yield, said Michael Leister, head of interest rate strategy at Commerzbank. He expects Lagarde’s assurances to continue to resonate with the market.
Italian bonds, which outperformed after Lagarde’s speech on Wednesday, saw 10-year yields drop 1 basis point on the day to 0.69%.
Central banks will again be the center of attention on Thursday, with Lagarde scheduled to meet with Bank of England Governor Andrew Bailey and Federal Reserve Chairman Jerome Powell at the ECB’s annual symposium at 4:45 p.m. GMT.
Other members of the ECB’s board of directors will also speak at the symposium earlier in the session.
“We expect other central bankers in Sintra to echo a similar cautious outlook on the outlook today. This should allow EGBs (euro government bonds) to maintain the strength seen yesterday, although some may seek to moderate rallies at this point, ”Mizuho analysts told clients.
On the primary market, Ireland will auction up to € 1.25 billion in debt via 10- and 30-year bonds and Italy will raise up to € 6 billion from three-way bonds, seven and 15 years old.
Reporting by Yoruk Bahceli, editing by Larry King