German government bond yield bounces back from one-week lows after ZEW data

Reuters | Jan 21, 2020 at 12:24 PM

* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr

LONDON, Jan 21 (Reuters) - A better-than-expected investor sentiment reading reversed a slide in Germany's 10-year government bond yield on Tuesday, after a virus outbreak in China had put investors in a risk-off mood.

The ZEW research institute said on Tuesday its monthly survey showed economic sentiment among investors rose to 26.7 from 10.7 in December.

Economists had expected an increase to 15.0. The result suggested investors believe the German economy might not be hurt as badly by trade tensions as previously thought.

Yields increased gradually after the survey result, wiping out an earlier fall to become flat on the day at around -0.21%.

A separate gauge measuring investors' assessment of the economy's current conditions improved to -9.5 from -19.9 in the previous month. Analysts had forecast a reading of -13.5.

Earlier, the 10-year government bond yield had hit a one-week trough, falling as low as -0.23%.

Investors said the yield had been pushed lower by reports of an outbreak of the coronavirus in China, where the death toll rose to six and authorities reported a surge in new cases.

"This morning the market started with a rather risk-off mood because of the coronavirus issue," said DZ Bank rates strategist Sebastian Fellechner, citing government bond markets in Australia and Japan.

The German surveys follow a pick-up in data releases in recent weeks, which has prompted economists to conclude that euro zone economic activity has probably bottomed out.

"If you look at the nature of it, I'm not sure this should give some additional information that is beyond the consensus of the investor community," said ING senior rates strategist Antoine Bouvet.

"This is not something like the Ifo that is purely rooted in the business community, which is giving us additional information," he said, referring to another closely followed German survey, based on data from around 9,000 firms across various sectors.

More sources
  • German government bond yield at one-week low amid coronavirus worries (Reuters: Jan 21, 2020 at 12:06 PM)