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Euro zone bond yields nudge higher as global sentiment improves

Published : Tuesday, 27 April, 2021 at 12:00 AM  Count : 6968

LONDON, April 26: Euro zone bond yields edged higher on Monday, reflecting brighter sentiment in world markets and a growing sense the worst may be behind for a coronavirus-battered economy.
Most 10-year bond yields across the currency bloc were up 1-2 basis points on the day, while U.S. Treasury yields were also a touch higher.
While bond markets have stabilised from a U.S. led selloff earlier this year, improving economic indicators and a pick up in the COVID-19 vaccination rollout have started to put some upward pressure on euro area borrowing costs.
The past few weeks have seen an acceleration in European vaccinations, with large European Union countries rolling out shots at a similar pace to Britain. The EU should meet its target of vaccinating 70% of adults by summer, according to NatWest Markets.
Germany's 10-year Bund yield was last up 2 basis points on the day at -0.24%, not far off seven-week highs hit last week. Thirty-year bond yields, at 0.31%, were near more than one-year peaks touched last week.
Andreas Billmeier, European economist Western Asset, said the uptrend in European bond yields should be gradual and fits in with the overall picture of a recovering economy.
"If you take out the U.S. rates dynamic, what you have is an economic recovery and that should go hand in hand with higher rates."
"Note that the ECB (European Central Bank) didn't make a peep when yields rose between December and February but only once volatility coming from the U.S. kicked in."
The ECB stepped up the pace of its bond purchases in March to contain a rise in borrowing costs, driven by U.S. Treasuries.    -Reuters






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