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Markets

German bond yields fall to lowest in over a week ahead of US data

  • Bond market focus is on data out of the United States, with a Reuters poll expecting retail sales to have fallen 0.2% month-on-month in July from a 0.6% increase in June
17 Aug 2021

German bond yields fell alongside those of US Treasuries to their lowest in over a week on Tuesday, ahead of a US retail sales report that is expected to add to data showing slowing economic momentum.

Risk sentiment was also dampened by a further spike in Delta variant-related COVID-19 cases and uncertainty following the Taliban's seizure of power in Afghanistan, with stock markets in Europe opening lower.

Bond market focus is on data out of the United States, with a Reuters poll expecting retail sales to have fallen 0.2% month-on-month in July from a 0.6% increase in June.

German bond yields give up rise after US price data

Industrial production, however, is expected to have increased 0.5% month-on-month, slightly higher than in June.

Following an unexpected sharp fall in US consumer sentiment on Friday that sent bond yields tumbling, signs that consumer spending faltered by a larger degree, given a resurgent Delta variant, could prompt yet another market rethink of the US Federal Reserve's taper timeline.

Data on Monday showed Chinese factory output and retail sales growth slowing sharper than expected, adding further uncertainty to the economic growth picture.

That usually benefits safe-haven bond prices, which move inversely with yields.

"The focus is on US data, scoured for any hints of further economic deceleration and leaving the bias for lower rates intact for now," ING analysts told clients.

Germany's 10-year yield, the benchmark for the bloc, fell nearly 3 basis points to -0.496% in early trade, the lowest since Aug. 6, tracking US Treasury yields lower.

Italy's 10-year yield was down similarly to 0.54%, keeping the closely watched gap with German equivalents at 103 bps.

In the primary market, Germany is scheduled to raise 6 billion euros from the auction of a new two-year bond.

Focus will be on a speech by Fed chairman Jerome Powell following the European markets close at 1730 GMT.

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Atif Khan Aug 17, 2021 04:12pm
The FBR is not in its senses, instead of encouraging towards documented and cashless economy these actions discourage customers to use POS or other electronic means to conduct the transactions. Unfortunately due to political uncertainty in the past decades we remained to be a developing country and those who are currently running our beloved country belong to the mindset of a developed country where everything is organized according to the law and then they try to apply the same policies here as they had experienced in the developed world. Above all the SRO culture in the country is a big menace to the economy as these economic decisions should be taken in the honorary parliament instead.
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