UPDATE 1-Euro zone bond yields dip ahead of Fed minutes
(Adds details, updates prices)
Aug 18 (Reuters) – Euro zone bond yields dipped on Wednesday but held above lows touched a day earlier as investors sought direction ahead of U.S. Federal Reserve meeting minutes due later in the day.
Risk sentiment improved on Wednesday as the fall in stock markets was contained, but worries around the impact of the spreading Delta variant of the coronavirus kept safe-haven government bonds supported.
On Wednesday, Germany’s 10-year yield, the benchmark for the euro zone, was down nearly 2 basis points to -0.487% by 1006 GMT, above the lowest in nearly two weeks of -0.501% touched on Tuesday.
“The fact that below-consensus U.S. retail sales failed to add to the bid for Bunds and Treasuries underscores that the more mixed macro backdrop is discounted and a larger trigger would probably be required to take yields lower,” said Christoph Rieger, head of rates and credit research at Commerzbank.
Data on Tuesday showed U.S. retail sales declined much more sharply than expected in July. That however had little impact on bond yields, which after a volatile session ended the day marginally lower on both sides of the Atlantic.
“Bunds are facing major resistance near -0.5% yields,” Rieger added.
The -0.50% level is often seen as a point of resistance for the 10-year Bund yield as it is the current level of the European Central Bank’s main policy rate.
The main market focus later will be on minutes of the Federal Reserve’s July meeting, due at 1800 GMT, which investors will scan for further clues of when the bank might start tapering its bond purchases.
In the primary market, Germany raised 827 million euros from the reopening of a 30-year bond, the final auction in this maturity before a syndicated issuance in September.
In syndications a borrower hires banks to sell debt directly to end-investors, allowing it to raise bigger volumes.
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