AIRLINK 81.10 Increased By ▲ 2.55 (3.25%)
BOP 4.82 Increased By ▲ 0.05 (1.05%)
CNERGY 4.09 Decreased By ▼ -0.07 (-1.68%)
DFML 37.98 Decreased By ▼ -1.31 (-3.33%)
DGKC 93.00 Decreased By ▼ -2.65 (-2.77%)
FCCL 23.84 Decreased By ▼ -0.32 (-1.32%)
FFBL 32.00 Decreased By ▼ -0.77 (-2.35%)
FFL 9.24 Decreased By ▼ -0.13 (-1.39%)
GGL 10.06 Decreased By ▼ -0.09 (-0.89%)
HASCOL 6.65 Increased By ▲ 0.11 (1.68%)
HBL 113.00 Increased By ▲ 3.50 (3.2%)
HUBC 145.70 Increased By ▲ 0.69 (0.48%)
HUMNL 10.54 Decreased By ▼ -0.19 (-1.77%)
KEL 4.62 Decreased By ▼ -0.11 (-2.33%)
KOSM 4.12 Decreased By ▼ -0.14 (-3.29%)
MLCF 38.25 Decreased By ▼ -1.15 (-2.92%)
OGDC 131.70 Increased By ▲ 2.45 (1.9%)
PAEL 24.89 Decreased By ▼ -0.98 (-3.79%)
PIBTL 6.25 Decreased By ▼ -0.09 (-1.42%)
PPL 120.00 Decreased By ▼ -2.70 (-2.2%)
PRL 23.90 Decreased By ▼ -0.45 (-1.85%)
PTC 12.10 Decreased By ▼ -0.89 (-6.85%)
SEARL 59.95 Decreased By ▼ -1.23 (-2.01%)
SNGP 65.50 Increased By ▲ 0.30 (0.46%)
SSGC 10.15 Increased By ▲ 0.26 (2.63%)
TELE 7.85 Decreased By ▼ -0.01 (-0.13%)
TPLP 9.87 Increased By ▲ 0.02 (0.2%)
TRG 64.45 Decreased By ▼ -0.05 (-0.08%)
UNITY 26.90 Decreased By ▼ -0.09 (-0.33%)
WTL 1.33 Increased By ▲ 0.01 (0.76%)
BR100 8,052 Increased By 75.9 (0.95%)
BR30 25,581 Decreased By -21.4 (-0.08%)
KSE100 76,707 Increased By 498.6 (0.65%)
KSE30 24,698 Increased By 260.2 (1.06%)

LONDON: Europe's top-rated German bond yield held near a six-week low on Thursday as North Korea outlined detailed plans for a missile strike near the US territory of Guam.

While an investor panic that followed a war of words between Washington and Pyongyang on Wednesday appeared to abate slightly, demand remained firm for assets that tend to perform well in times of market stress, including German Bunds.

Analysts said yields, which move inversely to prices, could fall further even as central bankers in the United States talked of a tightening in monetary conditions that could jack up global interest rates.

Germany's 10-year bond yield traded at 0.424 percent on Thursday, a shade above a low of 0.419 percent hit on Wednesday, according to Tradeweb data. US and British equivalents were also trading a touch above Wednesday's six-week lows.

 

"We would currently be careful with a whiff of risk aversion in the air and, by extension, also stay away from shorts in the rates market," RBC's global macro strategist Peter Schaffrik said.

"Bund (yields) might well move towards the 20bp area (0.20 percent) again - particularly if risky assets start wobbling a bit."

After President Donald Trump told North Korea that any threat to the United States would be met with "fire and fury", Pyongyang on Thursday said it was finalising plans to fire four intermediate-range missiles over Japan to land 30-40 km (18-25 miles) from Guam.

North Korea regularly threatens to destroy the U.S, but Thursday's report was unusual in its detail, leading some to speculate that Pyongyang was giving advance notice of changes to its missile programme rather than threatening an attack.

The US has sought cooperation from China, one of North Korea's few allies, to help secure a common stance against the isolated state. But Reuters on Thursday reported on a US naval operation in the South China Sea which could strain relations between the two global superpowers.

Analysts at Mizuho and ING said Wednesday's sharp moves in bond markets had been caused by speculative trading in derivatives markets rather than actual trading in the underlying assets.

"We therefore expect this outperformance from the Bund to be susceptible to underperformance in the coming sessions, even if other 'risk off' measures stay unchanged," Mizuho's head of euro rates strategy Peter Chatwell said.

One factor that could push up yields back up again is any tightening in monetary conditions in the US, the world's largest economy.

Federal Reserve policymaker Charles Evans said on Wednesday that low inflation would not stop the central bank from beginning to shrink its $4.5 trillion balance sheet next month.

 

Copyright Reuters, 2017

Comments

Comments are closed.