Germany's Bonds Underperform Before Nation Sells 10-Year Debt

  • Nation auctioned 4 billion euros of benchmark bunds Wednesday
  • Bund yield has climbed since ECB signaled no more rate cuts

Germany’s government bonds halted two days of losses after the nation sold 4 billion euros ($4.4 billion) of 10-year debt.

Europe’s benchmark securities were little changed as most euro-region bonds climbed. The German yield remains higher than before the European Central Bank’s policy decision on March 10, when President Mario Draghi announced an expansion of stimulus and signaled that there will be no further interest rate cuts.

“Bund yields have notched up since the ECB meeting as rate-cut expectations were priced out,” Benjamin Schroeder, a Frankfurt-based interest-rate strategist at Commerzbank AG, which is ranked first among dealers by Germany’s debt agency, wrote in an e-mailed note. “We consider the risk of a further back-up in bund yields remote.”

Germany’s 10-year bund yield was at 0.31 percent as of the 5 p.m. close in London. The price of the 0.5 percent security due in February 2026 was 101.845 percent of face value.

Italy’s 10-year bond yield fell three basis points to 1.33 percent, while that on similar-maturity Spanish debt slid one basis points to 1.51 percent.

Germany allotted the 10-year bunds at an average yield of 0.3 percent at Wednesday’s sale. That compares with 0.26 percent at a previous auction on Feb. 17, which was the lowest since April 2015.

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