German Bonds Post Third Weekly Gain Amid Deutsche Bank’s Woes

  • Benchmark 10-year yield approaches lowest since July
  • Nation’s two-year notes increase for sixth straight week

Deutsche Bank Stock Up on Lower Fine Speculation

Germany’s 10-year bonds advanced for a third week, pushing yields toward the lowest since July, as concern about Deutsche Bank AG’s financial health rattled investors and boosted demand for the euro region’s safest fixed-income debt.

The securities erased their daily increase late Friday as the largest German lender’s share price rebounded from a record low on speculation that it may reach a lower settlement with the U.S. Department of Justice. The euro-area’s peripheral bonds reversed an earlier decline.

Germany’s two-year notes, which are ineligible for purchase in the European Central Bank’s quantitative-easing program, advanced for a sixth consecutive week, highlighting that sentiment for riskier assets remains fragile.

“We are more in a risk-off, flight-to-quality type of market, with the correlation between stocks and bonds turning with the flight to quality,” said Vincent Chaigneau, London-based global head of rates and foreign-exchange strategy at Societe Generale SA. “I don’t think you really want to fade it. It’s too dangerous right now.”

Germany’s 10-year bund yield was little changed at minus 0.12 percent as of 5 p.m. London time, after earlier sliding four basis points, or 0.04 percentage point, to match the lowest he lowest since July 12. The price of the zero percent security due in August 2026 was 101.186 percent of face value.

The nation’s two-year note yielded minus 0.68 percent, down one basis point since Sept. 23.

The yield on Dutch 10-year bonds was little changed at zero percent, having earlier declined to minus 0.04 percent, while that on similar-maturity Spanish debt declined four basis points to 0.88 percent.

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