German Bund Yield Is 2 Basis Points From 3-Week Low Before ECB
German government bonds were little changed before European Central Bank policy makers announce the result of their monthly interest-rate-setting meeting.
Ten-year bund yields were within two basis points of an almost three-week low after a report confirmed the euro area slipped into a recession in the third quarter. The ECB will keep its main refinancing rate at an all-time low of 0.75 percent, according to the median estimate of analysts in a Bloomberg survey. French 10-year yields fell to a record as the nation sold 4 billion euros ($5.2 billion) of securities due between 2018 and 2027.
“From the ECB, we’ll hardly get anything,” said Norbert Aul, a rates strategist at Royal Bank of Canada in London. “We need to have a sustained improvement in the credit perception of peripheral markets before we see a sizable shift from bunds,” he said, referring to region’s most-indebted countries.
The German 10-year yield was at 1.35 percent at 10:02 a.m. London time. The rate dropped to 1.33 percent yesterday, the least since Nov. 19. The price of the 1.5 percent bond due September 2022 was at 101.33. Two-year notes yielded 0.005 percent.
The central bank will announce the rate decision at 1:45 p.m. in Frankfurt before ECB President Mario Draghi holds a press conference 45 minutes later. He will unveil the latest economic forecasts, including a first projection for 2014.
Gross domestic product in the 17-nation single-currency bloc slipped 0.1 percent from the second quarter, in line with the median forecast of 40 economists and an initial estimate, leaving the region back in a recession three years after emerging from the last one.
France sold 15-year bonds at an average yield of 2.56 percent, an all-time low. It last sold the securities on Sept. 6 at 2.85 percent, according to data compiled by Bloomberg.
The yield on French 10-year bonds was one basis point higher at 2.01 percent, after falling to 1.989 percent, the least on record. Austrian 10-year rates dropped to 1.727 percent, also a record, before settling at 1.75 percent. The yield on Switzerland’s 10-year bonds dropped to a low of 0.393 percent.
A report today will show German factory orders, adjusted for seasonal swings and inflation, rose 1 percent in October, after slumping 3.3 percent in September, the most in a year, according to the median estimate in another Bloomberg survey.
German bonds returned 4 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Spanish debt gained 4.9 percent and France’s earned 9.6 percent.