UPDATE 2-Euro zone bond yields broadly flat, focus on supply

  • 8/24/2021
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(Updates prices, adds U.S. Treasuries) Aug 24 (Reuters) - Euro zone bond yields were broadly flat on Tuesday with investors focusing on issuance in a data-light session. Risk sentiment has improved this week as concerns ease over Federal Reserve stimulus tapering and on full U.S. approval of the Pfizer/BioNTech vaccine, keeping the bloc’s bond yields above lows hit last week. Yields fell last week as the spread of the coronavirus and fears of a slowdown of U.S. Federal Reserve bond-buying boosted safe-haven bonds. Bond yields move inversely with prices. Germany’s 10-year yield, the benchmark for the euro area, was up just slightly at -0.475% by 1443 GMT, above last week’s two-week low of -0.502%, and after ticking down earlier in the session. Italian 10-year yields were down only half a basis point to 0.57%, bringing the closely watched gap to 10-year German yields to 104.5 bps, below Monday’s three-week high of nearly 107 bps. On Wall Street, U.S. Treasury yields rose as investors waited for a speech on Friday during which Federal Reserve Chair Jerome Powell could give indications on when the U.S. central bank is likely to begin paring bond purchases. Benchmark 10-year yields were up two basis points to 1.2734%. “The bond markets are still in a wait-and-see stance ahead of the Jackson Hole conference that begins on Thursday,” Jens Peter Sorensen, chief analyst at Danske Bank, told clients. “The markets seem to be adjusting their expectations towards a more dovish statement from Fed Chairman Powell, where he will be more vague on the tapering.” With little data to focus on in the euro zone except for an upward revision to Germany’s second-quarter gross domestic product, attention was on supply. Finland received more than 15 billion euros ($17.6 billion)of investor demand for the sale of a five-year bond that will raise 3 billion euros later on Tuesday, according to a lead manager memo seen by Reuters. That is the bloc’s first syndicated government bond sale - where a borrower hires investment banks to sell debt directly to investors - since the summer break. Germany raised 2.48 billion euros from the re-opening of a seven-year bond at auction. Outside the euro zone, Britain raised 3 billion pounds at a five-year auction, while the U.S. Treasury will raise $60 billion from a two-year auction, which will be followed by further issuance in other maturities this week. $1 = 0.8503 euros Reporting by Yoruk Bahceli; Additional reporting by Julien Ponthus; Editing by Bernadette Baum and David Holmes Our Standards: The Thomson Reuters Trust Principles.

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