German Bonds Advance on Safety Demand After Brussels Explosions

Updated on
  • Securities gain even as data point to resilient economy
  • Ten-year spread with Spain reaches most in more than a week

Germany’s government bonds climbed as investors sought the safest assets after explosions in Brussels on Tuesday killed at least 31 people.

Europe’s higher-rated sovereign securities outperformed those of so-called peripheral nations. Dutch bonds also advanced as the Netherlands sold 5.7 billion euros ($6.4 billion) of securities due in July 2026.

“It’s certainly a flight-to-quality bid in the wake of that news,” said Richard McGuire, London-based head of rates strategy at Rabobank International. “It was the breaking news this morning that informed this risk-off tone. Long-end yields are well supported, peripheral spreads are slightly wider.”

Germany’s 10-year bund yield fell two basis points, or 0.02 percentage point, to 0.21 percent at 4:18 p.m. London time, after earlier sliding as much as five basis points. The 0.5 percent bond due in February 2026 rose 0.175, or 1.75 euros per 1,000-euro face amount to 102.81.

The gain came even as reports showed business confidence in Europe’s largest economy improved in March for the first time in four months and manufacturing and services for the euro region as a whole climbed at the fastest pace in three months, in a sign that economic growth is being maintained even as deflationary pressures persist.

Belgium’s 10-year bond yield was little changed at 0.61 percent, having dropped as much as four basis points. Yields on similar-maturity Dutch debt dropped three basis points to 0.30 percent.

Spain’s 10-year bond yield increased less than one basis point to 1.45 percent, boosting the additional yield investors get for holding the securities instead of German bunds to 123 basis points, the most in more than a week based on closing prices.