Unprecedented European Central Bank stimulus measures imposed to stave off deflation are boosting bonds across the region, with yields on debt from Finland to Italy falling to new lows today. Investors have been lured to the relative safety of German and so-called semi-core euro-area bonds as the U.S. and European Union prepare new sanctions against Russiafollowing the downing of a Malaysian airliner over Ukraine and as Israel steps up its bombardment of Gaza.
“Yields are going lower because the market expects the ECB to do more in the low-growth, low-inflation environment that we are in,” said Lyn Graham-Taylor, a fixed-income strategist at Rabobank International in London. “Month-end demand also helps. It’s a bit of a function of low inventories and everyone being careful about being short heading into month end.”
A short position is a bet an asset’s value will drop.
Benchmark 10-year yields fell two basis points, or 0.02 percentage point, to 1.13 percent at 9:45 a.m. London time after sliding to 1.119 percent, the least on record according to data compiled by Bloomberg dating back to 1989. The 1.5 percent bund due May 2024 rose 0.195, or 1.95 euros per 1,000-euro ($1,344) face amount, to 103.435.