German government bonds fell, with 10-year securities set for a second weekly decline, as signs of a global economic recovery damped demand for the euro area’s safest sovereign assets.
Austrian, Dutch and French bonds snapped two-day gains before a report next week that analysts said will show a gauge of German investor confidence climbed to a six-month high in September. U.S. data yesterday showed initial jobless claims dropped to the lowest since 2006. Treasuries declined before the Federal Reserve meets next week amid speculation that policy makers will slow asset purchases.
“We’ve had a weaker start to the day in bunds but that’s essentially reflecting a drift higher in Treasury yields,” said Padhraic Garvey, head of developed-market bonds strategy at ING Bank NV in Amsterdam. “It’s an ongoing reduction in the risk profile geopolitically and in the wake of yesterday’s jobless-claims numbers which were supportive of the U.S. recovery.”
Germany’s 10-year bund yield rose one basis point, or 0.01 percentage point, to 2.01 percent at 10:53 a.m. London time. The rate has increased six basis points this week. The 2 percent security due in August 2023 fell 0.07, or 70 euro cents per 1,000-euro ($1,330) face amount, to 99.93.
The ZEW Center for European Economic Research in Mannheim will say its index of German investor and analyst expectations rose to 45.5 from 42 in August, according to the median estimate in a Bloomberg survey before the data is released on Sept. 17.
“We remain sellers at current levels on a medium-term perspective, but we see room for a stabilization today in the 2-2.05 percent area,” strategists at BNP Paribas SA, including Eric Oynoyan, wrote in an e-mailed note to clients.
Austria’s 10-year yield was little changed at 2.40 percent. The rate on similar-maturity Dutch bonds were also little changed, at 2.38 percent. French 10-year bonds yielded 2.56 percent after falling to 2.53 percent yesterday, the lowest since Sept. 4.
The Federal Open Market Committee will decide at its Sept. 17-18 meeting to reduce monthly purchases of Treasuries to $35 billion from $45 billion, according to the median of 34 responses in a Bloomberg survey of economists. Officials will maintain mortgage-bond buying at $40 billion, the survey shows.
The Treasury 10-year note yield added one basis point to 2.92 percent after reaching 3.005 percent on Sept. 6, the highest since July 2011.
German bonds lost 2.7 percent this year through yesterday, according to Bloomberg World Bond Indexes. French securities lost 2.2 percent, while those of the Netherlands dropped 3.3 percent.