LONDON: Germany's two-year bond yields rose on Wednesday after a report that the European Central Bank is looking to lend out more bonds to avert a market freeze.
The two-year Schatz yield shot up 6 basis points from the day's lows to minus 0.69 percent, having hit a record low earlier in the day. Other euro zone bond yields also rose, reversing earlier falls.
Reuters reported sources as saying the ECB is looking for ways to lend out more of its huge pile of government debt to avert a freeze in the 5.5 trillion euro short-term funding market.
"There is something going on with the repo markets and we can see that as soon as the ECB starts talking about tackling these problems we see a market reaction," said David Schnautz, interest rate strategist at Commerzbank.
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