- Data from world’s biggest economy outweighs impact of BOJ
- Euro-zone reports show faster inflation and slowing growth
German 10-year bonds rose for a third day, extending a weekly advance, as slower-than-predicted U.S. growth pushed Treasuries higher.
The euro zone’s benchmark government securities reversed an earlier decline triggered after the Bank of Japan kept its key monetary tools unchanged -- a decision that disappointed investors predicting a bigger increase in stimulus and stoked speculation it may reflect the plans of the European Central Bank.
Meanwhile, data showed euro-region inflation unexpectedly quickened in July, one of the first signs of Brexit’s impact on the economy, while growth slowed in line with analysts’ projections in the second quarter.
“It seems that the BOJ is near the monetary boundaries,” said Birgit Figge, a fixed-income strategist at DZ Bank AG in Frankfurt. “Market participants transfer this to the ECB, too -- the expectation that monetary policy can’t be eased and eased.”
Still, the data from the world’s largest economy trumped these concerns, and yields on Germany’s 10-year bund dropped three basis points, or 0.03 percentage point, to minus 0.12 percent as of the 5 p.m. London time close -- the lowest level since July 12. The zero percent security due in August 2026 rose 0.281, or 2.81 euros per 1,000-euro ($1,117) face amount, to 101.198.
The yield is down nine basis points since last Friday, with the securities posting a second weekly gain.