“Austria’s bonds rose, with two-year yields falling below zero for the first time, and French borrowing costs also dropped to the least on record as investors sought safer assets offering higher returns than German debt.
Spanish bonds fell as the nation sold 364- and 511-day securities. German two-year note yieldsdropped to a record as a government report showed investor confidence in Europe’s largest economy declined to a six-month low in July.
“It’s a story of the semi-core countries such as Austria, France and Belgium,” said Piet Lammens, head of research at KBC Bank NV in Brussels. “German yields below zero are a sign for many investors to give up some safety for the higher yields they can find in the semi core. The safety of these bonds is good enough in comparison to Spain and Italy.”