LONDON, April 2 (Reuters) – Eurozone government bond yields rose Thursday as some investors returned to riskier assets as demand for new bonds issued by Spain and France is expected to provide a measure of the current market sentiment.
Stocks were mostly mixed, with data suggesting that the rate of new coronavirus infections was slowing in some countries, but the economic toll of closures was increasing.
Rising oil prices after US President Donald Trump said he expected Saudi Arabia and Russia to quickly strike a deal to end their oil price war has improved overall tone on the stairs.
German 10-year government bond yields rose 3 basis points to -0.44%, moving away from the lows of -0.55% reached on Monday.
Other core bond yields in the eurozone were also higher. Italian yields have dropped. Italian yields often move in the opposite direction to the rest of the eurozone bond market, with investors buying Italian bonds when the sentiment of risk picks up. The 10-year yield briefly dropped 6 basis points to 1.48%.
This week has been a busy one for new debt issues, with Belgium and Portugal already enjoying strong demand for them and Spain and France are expected to hit the market on Thursday.
Analysts said many investors would turn to the primary markets and demand for new government debt as a guide.
“The supply in these times tends to be much larger as an indicator of where the market will trade than it normally would be,” said Peter Chatwell at Mizuho.
“Once we see the answer to today’s offer, then the market will have more conviction. “
France is expected to raise 7.5 billion to 9.5 billion euros in bonds. Spain aims to raise 5 to 6 billion euros.
New data on unemployment claims in the United States, expected Thursday later, will also be widely monitored after last week’s figures showed that the number of Americans filing for unemployment benefits hit a record high of more than 3 million.
Unicredit analysts noted that the Federal Reserve had announced overnight that it would temporarily relax certain capital requirements for banks, which should continue to put pressure on Treasury bill yields.
With yields on T-bills falling again, Unicredit noted that the spread between German bonds and T-bills was narrowing.
The yield on the 10-year US Treasury fell by 4 basis points in the first European exchanges to 0.598%. (Report by Tommy Reggiori Wilkes, edited by Larry king)
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