Economics
Investors to Look Beyond ECB Letdown as Yield Rally Offers Value
- German 10-year yield jumped by most since 2011 on Thursday
- Yields exceed analysts' year-end forecast by most since June
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Don’t write off European bonds just yet.
German yields surged by the most since 2011 on Thursday after European Central Bank President Mario Draghi surprised the market by underwhelming their expectations on stimulus. The selloff pushed the nation’s 10-year yields to the highest relative to analysts’ year-end forecasts since July, after the ECB’s decision to cut its deposit rate by 10 basis points and extend the length of its bond-buying program was deemed by the market as inconsistent with Draghi’s pledge to “do what we must” to boost inflation.