Euro zone bond yields dip as Fed seen coy on taper

  • 8/19/2021
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LONDON, Aug 19 (Reuters) - Euro zone government bond yields dropped across the board on Thursday, tracking U.S. Treasuries, after minutes from a U.S. Federal Reserve meeting showed that the world’s most important central bank is not yet ready to slow down its asset purchases. Minutes from the Federal Reserve’s July meeting showed that policymakers in the United States felt the employment benchmark for decreasing support for the economy could be reached this year, but had not yet been satisfied. Investors are keeping a keen eye out for any signs that the Fed will start to “taper” bond purchases and end the extraordinary stimulus put in place to combat the economic impact of the COVID-19 crisis. The U.S. central bank is usually the first mover, paving a policy path for others such as the European Central Bank and the Bank of Japan. “The FOMC minutes were a mixed bag, but apparently somewhat less hawkish than markets had feared,” analysts at RBC Capital Markets said in a note. While inflation in the United States is above target, the Fed’s stance that the maximum-employment goal had not yet been met suggests the timeframe for a tapering announcement is very unlikely to come at the September meeting, the analysts added. U.S. Treasury yields fell 4 basis points in early European trade to 1.233%, pulling other major government bond yields across the world lower. Euro zone bond yields dropped across the board, with German 10-year bond yields, the benchmark for the bloc, falling a basis point to -0.49%, within touching distance of a six-month low of -0.524% hit earlier this month. Other high-grade debt such as Dutch and Austrian government bonds also saw yields dip towards recent lows., Later on Thursday, France is due to sell short-dated conventional bonds and inflation-linked debt in an auction. Analysts expect the country to raise between 6.5-8 billion euros from the sale. (Reporting by Abhinav Ramnarayan; Editing by Emelia Sithole-Matarise) Our Standards: The Thomson Reuters Trust Principles.

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