Insider Economy Euro zone bond yields fall on coronavirus fears

Euro zone bond yields fall on coronavirus fears

Euro zone bond yields fell as risk appetite dwindled on Friday, with further cases of coronavirus boosting safe-haven assets.

The death toll in mainland China reached 636 by Thursday and more than 31,000 confirmed cases, China’s National Health Commission said.

“The reason that fixed-income is looking firmer… is the reaction formation from stock markets overnight with losses there in the face of signs that the spread of the virus is not so far showing signs of slowing,” DZ Bank strategist Andy Cossor said.

The pan-European stocks benchmark STOXX 600 was down 0.4% after four straight days of gains.

“If you get bad coronavirus death numbers out of China over the weekend, which would be bad for risky assets, you can’t get in and out of the market when it’s closed,” Cossor said of investor demand for bonds on Friday.

Most 10-year government bond yields fell 2 basis points, with Germany’s benchmark at -0.38%.

The Bund is set to have its worst week in a month, with yields up 6 basis points this week and after reaching three-and-a-half-month lows of -0.447% at the start of the week, as Chinese authorities stepped up measures to relieve pressure on the economy.

China’s economic activity is expected to recover once the virus is brought under control, a deputy governor of the country’s central bank said on Friday.

Greek government bonds were the clear out-performer, with the 10-year yield down another 5 bps to 1.10%, after hitting record lows on Thursday on optimism after the euro zone bailout fund waived a compulsory payment due from Cyprus.

In Europe, Germany’s industrial output registered its biggest drop in more than a decade in December, revised data showed. That followed an unexpected decline in industrial orders for December.

“The day’s focus is on the U.S. payroll number,” said TD Securities strategist Pooja Kumra.

The market could also be trading cautiously ahead of the data due at 1330 GMT, she said.

A Reuters poll forecast a pick-up in January, but focus is on a revision of data from April 2018 to March 2019. Any steep downgrade for that period would suggest a significant slowdown in job growth this year.

Later on Fitch is scheduled to publish its review of Italy’s credit rating, which stands two notches above junk at BBB, with a negative outlook. Analysts expect the review to be a non-event.

“The key points on which Fitch’s negative outlook is based are Italy’s high public-debt/GDP ratio (which is close to 135%), the country’s low growth trend and its elevated political uncertainty. None of these aspects have changed meaningfully since Fitch’s last review in August 2019,” UniCredit analysts said in a note.


Top Stories

Nicosia hosts Cyprus-Greece-Egypt Trilateral Summit

Nicosia on Wednesday is hosting the 8th Cyprus-Greece-Egypt Trilateral Summit with the leaders of the three countries set to discuss several issues of mutual...

Partly cloudy on Wednesday, possible afternoon showers

Partly cloudy on Wednesday with isolated showers and possible thunderstorms and hail - mainly inland and in the mountains. Winds will be light in the...

EU takes legal action against ‘golden passport’ schemes in Cyprus, Malta

The European Union's executive said it was launching legal action against Cyprus and Malta over their investor citizenship programmes, also known as "golden passport" schemes. The schemes...

Total of 152 new cases of covid-19 on Tuesday

The Health Ministry announced 153 new COVID-19 cases on 20 October, out of 4,410 laboratory tests, taking confirmed infections to 2, 839. The break-down of...

Stench in Kokkinotrimithia and Mammari due to farms and burned garbage

Citizens of Kokkinotrimithia and Mammari contacted philenews and complained that at the Kafkalla location some people threw a huge quantity of garbage and set...


Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...


No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...