Euro Zone Bond Yields Drift Higher ahead of Ifo, BoE


LONDON, June 24 Reuters Government bond yields in the euro area drifted higher on Thursday, pushed up by brighter prospects for the blocs economy.

In Germany, the euro zones benchmark bond issuer, 10year yields have risen around 12 basis points from lows hit a day after the European Central Banks reaffirmed its dovish policy stance at a June 10 meeting. A hawkish shift by the U.S. Federal Reserve last week added to upward pressure.

A Bank of England meeting later on Thursday could further push up bond yields if policymakers suggest that massive stimulus could be taken away sooner than expected as the economy bounces back from the COVID19 shock.

In early trade, most 10year bond yields were up around one basis point on the day, with Bund yields 1.2 bps higher at 0.17.

Analysts expect signs of a strengthening economy to keep upward pressure on borrowing costs. On Wednesday, IHS Markits Flash Composite Purchasing Managers Index, seen as a good guide to economic health, jumped to 59.2 in June from 57.1, its highest reading since June 2006.

Germanys closelywatched Ifo business sentiment survey is released later on Thursday.

Bond markets appear to have found a new balance after the Fedinduced volatility eruption last week, said Christoph Rieger, head of rates and credit research at Commerzbank.

While Bunds stabilised, the longend curve resteepened further and inflation breakevens rewidened, suggesting that fundamentals are slowly taking over from positioning again….


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