(corrects the month from October to paragraph 2 to September, no other changes to the text)
LONDON, Oct 4 (Businesshala) – The cost of borrowing in the euro area fell below recent highs on Monday, a sign that bond markets are on more stable ground after a recent sharp selloff, fueled by concerns that monetary Tight may come soon. .
Inflation could prove more sticky than expected as ten-year government bond yields from Germany, France and the Netherlands rose nearly 20 basis points in September and a sharp turnaround from the likes of the US Federal Reserve and the Bank of England. shattered the bond markets.
But without new incentives to fuel sell-off in bonds, yields have fallen below their highs.
In early trading Monday, most 10-year bond yields were little changed that day, but remained well below a nearly three-month high at the end of September.
Germany’s benchmark 10-year Bund yield, for example, was marginally lower at -0.23%, having risen to a high of -0.17% last week.
“The coming sessions will show whether the Bund is supported as risk sentiment stabilizes,” said Rainer Güntermann, a rate strategist at Commerzbank.
A note of caution in world stock markets also supported the demand for safe-haven loans along with concerns about China’s property sector, which is weighing on equities.
Analysts forecast government bond issuances in the euro area could reach as high as €20 billion this week, a factor that could test the calm in bond markets as new supply often puts pressure on yields.
Elsewhere the focus was on negotiations to form a new coalition government in Germany after the 26 September election.
Germany’s centre-left Social Democrats (SPD) said on Sunday they were open to three-way coalition talks with the Greens and Free Democrats (FDP), but the two smaller parties kept the option of an alternative coalition open. conservative.