German Government Bonds Advance but Trail US Treasuries as Retail Sales Disappoint

Deep News02:31

The German sovereign yield curve experienced a bull flattening, yet its performance lagged behind that of US Treasuries, which led gains following an unexpected stagnation in US retail sales for December. The advance in eurozone bonds was further supported by robust demand for debt issuance from Germany, the Netherlands, and Austria. Debt issued by the European Union through banks in two parts also attracted substantial subscriptions.

The yield on Germany's 10-year government bond headed towards its lowest closing level in over two months, while yields on French and Italian bonds of the same maturity fell to their lowest points since November.

On Wednesday, bond issuance from Germany and Greece was predominantly focused on longer maturities; France is anticipated to issue a 30-year bond via banking channels.

The UK gilt yield curve also saw a bull flattening but underperformed compared to German bunds and US Treasuries, as Prime Minister Keir Starmer sought to calm internal party disputes.

Market data: - Germany's 10-year yield decreased by 4 basis points to 2.80%; - German bund futures rose 30 ticks to 128.61; - Italy's 10-year yield fell 4 basis points to 3.41%; - France's 10-year yield declined 4 basis points to 3.40%; - The UK 10-year gilt yield dropped 3 basis points to 4.50%.

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