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Negative Yield on Four-Fifths of German Bonds Leaves Market Wary

  • Germany-Spain 10-year yield spread falls to lowest in 2016
  • Central banks, falling oil prices still provide support
Updated on

Germany’s government bonds held a two-day drop as the nation auctioned two-year securities at a time when some investors are questioning the sustainability of a rally that’s pushed the yield on more than 80 percent of Europe’s benchmark sovereign securities below zero.

The country’s bonds have performed worse than so-called peripheral debt in the past week, pushing the extra yield, or spread, that investors get for holding similar-maturity Spanish debt to the lowest since December. Germany sold 5 billion euros ($5.6 billion) of notes due in September 2018, a day after a weak 10-year bond auction in Japan helped fuel a global selloff.