German 10-year bond yields drop to fresh low

Wednesday, January 07, 2015

German bond yields fell to a new record low yesterday as an increasing demand for safe haven assets saw investors pile into government backed securities. Ten year German government bond yields experienced substantial flows yesterday, with buying activity firm from the open and throughout the entire day as yields fell from 0.518% to a fresh all-time low of 0.441%. Market participants have increasingly displayed caution in recent sessions as the possibility of a Greek exit from the eurozone ahead of elections later this month as well as a growing threat of eurozone deflation prompt investors to reallocate their portfolios, increasing holdings of safe haven assets.

Apprehension among market participants has gathered pace in recent sessions as worries that Greece’s anti-austerity party, Syriza, could gain power at the snap elections due to take place on January 25th add further pressure to benchmark indices. After a tentative start to the session, Wall Street stocks struggled to gain a foothold in positive territory yesterday, with both the S&P 500 and DJIA extending declines as they lost between 0.7-0.9% at the close.

Front month Brent crude futures extended declines towards $50/bbl during overnight trading as the broadly risk off market sentiment and bearish fundamentals pushed the global benchmark lower for the ninth straight session. Front month WTI prices also displayed considerable downward pressure both yesterday and early on this morning, with futures trading towards $47/bbl ahead of today’s official EIA inventory data. Market participants expect data to indicate crude inventories expand by 700K barrels w/w while gasoline and distillate stockpiles are expected to build by 3.66m barrels and 1.97m barrels w/w respectively.

German 10-year bond yields drop to fresh all-time low

GDBR10 Index Germany Generic Go 2015 01 07 07 48 42

Brent futures dip towards $50/bbl

CO1 Comdty Generic 1St CO Fut 2015 01 07 08 08 23

Events for today

0830

DE

Dec

Markit Construction PMI

0855

DE

Dec

Unemployment Rate

1000

EZ

Nov

Unemployment Rate

1315

US

Dec

ADP Employment Change

1330

US

Nov

Trade Balance

1530

US

w/e

EIA Energy Stocks

1900

US

Dec

FOMC Meeting minutes

All times UK Local Time

 

Topics: Crude oil, ECB, Brent, Germany
More from: Kash Kamal