Bund yields hit one-month low before an uncertain weekend

AMSTERDAM: German 10-year yields hit a one-month low on Friday, as the coronavirus pandemic and geopolitical tensions boosted demand for safe-haven bonds going into the weekend.

The governor of Texas paused the state's reopening as COVID-19 infections and admissions to hospital surged and the United States set a record for a one-day increase in cases .

The US Senate also passed legislation to impose sanctions on people or companies that back Chinese efforts to restrict Hong Kong's autonomy, a potential flashpoint in trade tensions.

Coronavirus developments and more talk of trade tensions heightened the risk of important events happening outside market hours, Mizuho analysts said. That tends to make investors more cautious before the weekend.

Morale among Italian businesses and consumers rose in June, data showed, as the country recovered from the worst phase of the COVID-19 pandemic.

Lending to euro zone companies continued to rise in May as companies relied on bank credit to stay afloat during the pandemic, the European Central Bank said on Friday.

The annual growth rate of the M3 measure of money supply accelerated to 8.9% from 8.2%, beating expectations of a Reuters poll.

There was little reaction to any of those data points. Later in the session, Germany's 10-year benchmark yield dropped one basis point on the day to -0.483%, a one-month low.

Italy's 10-year yield was last down one basis point at 1.36% after a sell-off that pushed it as much as six basis points higher a day earlier.

"The market now treats a lot of economic data ... as a bit of a lagging indicator," said Antoine Bouvet, senior rates strategist at ING, citing worries of new lockdowns.

"Even if this is an improvement, it might be before a worsening again because of the number of Covid-19 cases."

Italy will sell five- and seven-year bonds in the third quarter, targeting issuance of at least 10 billion euros for each, as well as a zero-coupon 2022 bond for at least 9 billion euros, its Treasury said on Thursday.