LONDON: Safe-haven German bond yields were set for their first weekly fall since mid-May on Friday after growth fears gripped markets, though they reversed some of the drop after a German business sentiment survey indicated a recession was not yet in sight.
Prior to this week, yields had risen sharply in the face of red-hot inflation and aggressive central bank rate hikes.
But the US Federal Reserve chairman committing to curbing inflation even at the risk of a growth downturn, a sharp slowdown in business activity growth and Germany triggering the alarm stage of its emergency gas plans have put growth fears in the spotlight this week.
Germany’s 10-year yield, the benchmark safe asset for the euro area, has fallen 20 basis points (bps) this week, the first weekly fall since mid-May.
Two- and five-year yields, particularly sensitive to policy expectations, have fallen even more, by 26 and 29 bps respectively.
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