LONDON: German bond yields headed for their first weekly fall in five weeks on Friday as the market focused again on central banks' continued use of heavy stimulus, which is helping to bring stability after weeks of violent price swings.
The first fall in German business morale in seven months, albeit a shallower dip than forecast, supported demand for government bonds. Greece was the exception in the European bond market, as its yields rose after the latest talks with creditors failed to deliver any solution to its debt crisis.
But German 10-year yields, the benchmark for euro zone borrowing costs, led other euro zone bond yields down, steadying after a dramatic sell-off that has driven up Bund yields some 55 basis points from a record low of 0.05 percent in mid-April.
European Central Bank policymakers helped halt that sell-off earlier in the week, with Executive Board member Benoit Coeure saying the bank would accelerate its bond buying in the next six weeks, anticipating a decline in liquidity over the summer.
German 10-year yields were 3 basis points lower on the day at 0.60 percent, with French and other top-rated European bond yields down a similar amount. Italian and Spanish equivalents were steady to a touch lower on the day.
"We see some weaker data that may give a little bit of support to the ongoing QE and (the view) that there's still room left for more expansionary policy," said DZ Bank strategist Christian Lenk.
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