Euro zone bond yields tick up; focus on supply

  • 8/24/2021
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Aug 24 (Reuters) - Euro zone bond yields ticked up on Tuesday with investors focusing on issuance in a data-light session, as risk sentiment improved on the back of declining Federal Reserve tapering fears and full U.S. approval of the Pfizer/BioNTech vaccine. That followed a week of falling bond yields as investors opted for bonds’ safety in the face a spreading coronavirus and fear of a slowdown of U.S. Federal Reserve bond-buying. On Tuesday, Germany’s 10-year yield, the benchmark for the euro area, was up 1 basis point to -0.47% at 0712 GMT, on track for a second session of increase, though it was slightly below Monday’s one-week high of -0.457%. Italian 10-year bond yields were unchanged at 0.59%, with the closely watched gap to 10-year German yields at 105 bps, below Monday’s three-week high of nearly 107 bps. With little data to focus on in the euro zone ahead of the Fed’s Jackson Hole symposium on Friday, attention was on supply. Finland started the sale of a five-year bond that will raise three billion euros ($3.52 billion), showed a lead manager memo seen by Reuters. That will be 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 will raise 3 billion euros from the re-opening of a seven-year bond at auction. “The argument for higher (interest) rates in the run-up to Jackson Hole hinges on supply,” ING analysts told clients. “Treasury auctions and debt sales from Finland, Germany, and Italy this week are manageable but should weigh on bond direction due to lower liquidity conditions, and to limited risk appetite ahead of the symposium,” they said. Outside of the euro zone, Britain will raise 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 = 0.8519 euros Reporting by Yoruk Bahceli; Editing by Christopher Cushing Our Standards: The Thomson Reuters Trust Principles.

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