Eurozone bond yields steady ahead of ECB decision

Business | 21 Apr 2021 6:40 pm

Eurozone bond yields held below recent highs on Wednesday, a day ahead of a European Central Bank meeting, while there was little reaction to Germany's constitutional court dismissing challenges to its approval of the EU recovery fund, Reuters reports.

Rising coronavirus cases and a fall in the oil price cast doubt on the strength of global economic growth and dampened risk appetite across global markets on Wednesday.

Investor focus also turned to Thursday's ECB meeting. The bank is largely expected to keep policy on hold, while investors are looking for clarity on how it will react to an economic recovery in Europe, especially in terms of its emergency bond-buying program, which holds down government borrowing costs.

Market reaction was muted to news that Germany's constitutional court paved the way for the country to sign off legislation ratifying the European Union's Recovery Fund as it dismissed legal challenges against the plan.

The challenges were a potential threat to government bonds from highly-indebted Southern European countries like Italy, which stand to benefit most from the fund.

The German 10-year yield, the benchmark for the euro area, was up less than 1 basis point to -0.25 percent at 0953 GMT, below the highest level since late February, at -0.215 percent, touched on Tuesday.

Italy's 10-year yield was down less than 2 basis points, with the risk premium on top of German bonds holding at 101 basis points.

 



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