German government bonds stabilize after worst euro-era decline
By Bloomberg
German government bonds stabilized after a slump this week that triggered the worst two-day drop in the history of the euro area.
Ten-year yields subsided after surging to their highest level in eight months in a storm whipped up by European Central Bank President Mario Draghi, who said on Wednesday that markets must get used to periods of higher volatility.
“Draghi added to the volatility with the comments and he’s probably right that we are going to have more,” said Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen. “We had been expecting bond yields to go higher coming into the summer but it’s been much more violent than expected.”
The yield on Germany’s 10-year securities was at 0.88 percent at 1:54 p.m. London time, after touching 0.996 percent, the highest level since Sept. 25. The price of the 0.5 percent bund due in February 2025 was at 96.53 percent of face value.
The yield increased more than 34 basis points in the previous two days, the biggest jump since at least 1999.
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