Euro-Area Bond Yields Have a Long Drop Ahead, HSBC's Major Says
- Investors will chase yields down on Italian, Spanish debt
- Traders are betting the ECB will expand stimulus this year
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Euro-area government bond yields have a long descent ahead of them, according to Steven Major, HSBC Holdings Plc’s head of fixed-income research.
The region’s lower-rated nations, such as Italy and Spain, will continue to see investors piling into their debt markets as yields on AAA rated German bonds are too low, Major said. German two-year note yields dropped to a record last week after European Central Bank President Mario Draghi reignited bets that policy makers will increase monetary stimulus. Benchmark German 10-year bund yields have been below 1 percent for most of the year as the ECB engages in a monthly 60 billion-euro ($64 billion) bond-buying program. The yield will fall to 0.2 percent by the end of 2016, Major forecast.