Bund Yields Near 2-Week Low Before Inflation Report

(Corrects reference to Dutch auction in second paragraph.)

German 10-year bond yields approached a two-week low before a report economists said will show inflation in Europe’s biggest economy slowed this month.

The 10-year break-even rate, a gauge of inflation expectations, was two basis points from the highest since January. Italy plans to auction 8.5 billion euros ($11.3 billion) of 182-day bills. French bonds were little changed as a report showed gross domestic product grew less than previously estimated.

The German 10-year yield was at 1.87 percent at 7:27 a.m. London time. The yield fell to 1.855 percent on March 23, the least since March 13. The 2 percent bond due January 2022 traded at 101.1 percent of face value. French 10-year bonds yielded 2.96 percent.

The 10-year break-even rate, derived from the difference in yield on conventional and inflation-linked German securities, was at 1.80 percentage point, after reaching 1.82 two days ago, the highest since Jan. 24.

A preliminary reading from the Federal Statistics Office will show German consumer price inflation, calculated using a harmonized European Union method, slowed to 2.3 percent from a rate of 2.5 percent in February, according to the median of 24 forecasts in a Bloomberg News survey.

German bunds have lost 0.2 percent this quarter, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. French bonds have gained 2 percent and Spanish securities have risen 1.2 percent, the indexes show.

To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.