Azernews.Az

By Bloomberg

European government bonds rose as minutes of the Federal Reserve’s July meeting prompted investors to push back their outlook for interest-rate increases, boosting demand for fixed-income assets.

Yields on German 10-year bunds, Europe’s benchmark sovereign securities, approached the lowest level in more than two months after the minutes showed most Fed policy makers didn’t consider conditions right for an interest-rate increase. Spain’s bonds advanced for a second day as the nation prepared to auction as much as 3.5 billion euros ($3.9 billion) of debt Thursday, including the current 10-year security.

German 10-year bund yields fell three basis points, or 0.03 percentage point, to 0.59 percent as of 8:03 a.m. London time. It touched 0.586 percent on Aug. 12, the least since June 2. The 1 percent security due in August 2025 rose 0.245, or 2.45 euros per 1,000-euro face amount, to 103.92.

Minutes of the Fed’s July meeting released Wednesday showed officials didn’t consider conditions for the first rate increase since June 2006 have yet been reached, even though they “were approaching that point.”

Futures show a 36 percent chance the Fed will raise its benchmark rate at its Sept. 16-17 meeting, based on the assumption that the effective fed funds rate will average 0.375 percent after the first increase. The odds were 48 percent at the end of last week.

Spanish 10-year bond yields fell three basis points to 1.96 percent, while those on similar-maturity Italian debt declined three basis points to 1.77 percent. Spain also plans to sell notes maturing in April 2018 and January 2024.