Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

German Bonds Drop as Euro-Area Inflation Tempers ECB Speculation

Don't Miss Out —
Follow us on:

Feb. 28 (Bloomberg) -- German government bonds dropped for the first time in four days after euro-area inflation beat analyst estimates, damping the case for the European Central Bank to expand monetary stimulus.

Benchmark 10-year yields rose from near the lowest level since July, while those of France, the Netherlands and Belgium also climbed. The ECB meets next week to set policy and release updated consumer-price forecasts. Faster price increases erode the value of fixed payments on bonds. A gauge of German inflation expectations jumped from the lowest since May 2012.

“This suggests there’s no urgency for the ECB to act,” said Harvinder Sian, a fixed-income strategist at Royal Bank of Scotland Group Plc in London. “In the big picture this is not a game changer as inflation is still low and has been surprising on the downside for some time. From the ECB’s perspective it’s a question of what their 2016 forecasts look like.”

Germany’s 10-year bund yield rose six basis points, or 0.06 percentage point, to 1.63 percent at 4:19 a.m. London time after dropping to 1.55 percent yesterday, the lowest since July 24. The rate has declined three basis points this week. The 1.75 percent bond maturing February 2024 fell 0.585, or 5.85 euros per 1,000-euro ($1,381) face amount, to 101.13.

Annualized euro-area consumer prices, calculated using a harmonized European Union method, rose 0.8 percent this month, matching January’s reading. That’s above the median estimate in a Bloomberg News Survey for 0.7 percent.

French Bonds

French 10-year yields rose seven basis points to 2.20 percent. Their Dutch equivalents also climbed seven basis points, to 1.85 percent. The rate on Belgium’s 10-year bonds increased six basis points to 2.34 percent.

Germany’s 10-year break-even rate, a gauge of the consumer-price outlook derived from the yield gap between bunds and index-linked securities, rose three basis points to 1.34 percentage points, having dropped to 1.30 percentage points earlier, matching the lowest since May 2012.

German bonds returned 2.6 percent this year through yesterday, according to Bloomberg World Bond Indexes. Italian securities gained 3.9 percent and Spain’s earned 4.2 percent.

To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net

To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.