Bund yields move above 1% as equity sell-off overdone

Wednesday, June 10, 2015

Bund yields hit 1% for the first time in almost nine months as global equity markets halted the sell-off which has seen short term profit taking over the past few sessions. Yields on ten year German government bunds spiked towards 1.057% today, the highest levels since September last year, as investors rebalanced portfolios, opting to sell out of safe haven assets in search of greater yield. With the DAX index having lost almost 7% since the start of the month, after dropping to a fresh four month low of 10,864.68 yesterday many market participants viewed the recent sell-off in equities as overdone, especially since recent economic data releases hint at a more robust global economy as earnings and inflation fears subside.

Greek debt negotiations are still in commanding the attention of investors around the world, with the balance of power seemingly tilting in favour of Germany and France, as Angela Merkel and Francois Hollande postponed their meeting with Greek PM Alexis Tsipras in order to press for further concessions. After proposing a fresh set of terms on Monday, officials in Athens awaited the response from eurozone lenders, however, the proposals failed to impress and fears that they would fall short of plugging the deficit prompted monitors to push for more radical reforms. The euro traded within a narrow range for most of the day but experienced a mid-morning spike towards 1.1380 against the dollar and then again in the early afternoon towards 1.1340 before settling back down around the open, trading near 1.1285 towards the end of the trading day. 

10 year German government bond yields rally above 1%

GDBR10 Index Germany Generic Go 2015 06 10 12 48 01

EUR spikes higher throughout the day before settling back to opening levels

EUR Curncy Euro Spot Daily 10 2015 06 10 15 30 34

Topics: EUR, Greece, Yields
More from: Kash Kamal