Germany’s 10-year borrowing rate fell to -0.34% from -0.31% at the close on Thursday.
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The debt market continued to retreat on Friday in a session, however, rather soft, centered on the health situation in China and generally encouraging leading indicators.
“With such strong equity markets, we might have expected tension on the bond market” but rates are showing a slight drop, observed Antoine Lesné, strategy and research manager at SPDR ETF, at AFP.
Investors remained focused on the latest developments around the Chinese coronavirus. Beijing has stepped up efforts to contain the spread of this new killer virus with the confinement of more than 40 million people, while many of the Lunar New Year festivities on Saturday have been canceled and popular sites have been closed to visitors.
The official death toll from the coronavirus, which emerged in central China’s Wuhan in December, worsened further on Friday, with 26 deaths out of more than 800 people infected in China.
A slight pressure on rates, although short-lived, was however noted after partially better than expected PMI indicators among certain members of the euro zone, which “give a little more hope that Germany will rebound”, a explained Mr. Lesné.
PMI indices
Private sector growth in the eurozone stagnated in January, according to the first estimate of Markit’s composite PMI index.
“The PMI index in France did a little worse in services, at 51.7 points against 52.2 expected, but the index is a little better than expected on the manufacturing side, at 51 against 50.6” anticipated , detailed the expert.
“In Germany, the manufacturing index is a little higher than expected, at 45.2 against 44.5 expected. Above all, the services index, at 54.2 against 53, surprises a lot on the rise, “he continued.
“At the same time, there is an appetite for risk but at the same time the desire to be a little protected”, hence the return of returns, summed up Mr. Lesné.
At 6:00 p.m. (5:00 p.m. GMT), Germany’s 10-year borrowing rate fell to -0.34% from -0.31% on Thursday at the close of the secondary market, where the already issued debt is traded.
The yield with the same maturity in France followed the same downward trend, at -0.08% against -0.06%, like the Spanish 10-year borrowing rate, at 0.34% against 0, 35%. That of Italy fell to 1.23% against 1.25%.
The fragile coalition in power in Italy is preparing for crucial regional elections on Sunday in Emilia-Romagna, which The League (far right) hopes will trigger a political earthquake and allow its leader Matteo Salvini to return to power.
The UK 10-year yield also eased to 0.56% from 0.59%.
In the United States, the 10-year borrowing rate fell to 1.69% from 1.73%, as did the 30-year borrowing rate to 2.14% against 2.18%. The one at two years stood for 1.49% against 1.51%.
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