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Government bond yields declined in the euro area

Government bond yields declined in the euro area

Eurozone government bond yields plunged in trading on Tuesday as the contagious boom in the coronavirus and uncertainties surrounding the agreement governing future trade relations between the UK and the European Union reduced risk appetite.

Several countries closed their borders to Britain in response to concerns that a rapidly mutating virus would spread in London and southeast England, leading to

Causes travel chaos and threatens food shortages a few days before the island nation permanently leaves the European Union.

British Prime Minister Boris Johnson said the government had “contacted Paris at all levels” to get freight traffic between Dover in England and Calais in France as soon as possible.

The French authorities will not accept freight movement from the British side from zero on Monday.

Traffic to Britain was also largely halted as a result of the short circuit, as the English railway station at Dover Port and the Channel Tunnel were closed.

Photo: AFP

The yield on German 10-year government bonds, which is considered the benchmark for the euro zone, fell 1.2 basis points to -0.59 5% Tuesday morning. The yield on French 10-year government bonds decreased by one basis point to 0.350 percent, while Italian 10-year government bonds were offered at a 0.518 percent yield, down 2.5 basis points.

Britain’s 10-year government bond yields were 0.220 percent at noon Tuesday, up 1.3 basis points to 6.04 percent. Yields closed at 0.207% on Monday, and their level in trading so far on Tuesday ranged from 0.197% to 0.226%.

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The US Congress finally voted on another stimulus package on Monday after months of tug of war in the money and capital markets. The $ 892 billion program threw a lifeline to the pandemic-stricken economy and ensured continued federal government funding, but markets were hoping for hefty values ​​of $ 2 trillion.

Meanwhile, the UK and the European Union have yet to agree on the terms of their future trade relations, although there is only ten days left until the end of the year.

The agreement is supposed to be lifted by Wednesday evening at the latest, otherwise there will be no time for EU member states to agree to the deal before New Year’s Eve.

Knowing that there is only one discussion, disagreements over fisheries issues, hinders agreement, and here too, some kind of deal has been set.

The United Kingdom withdrew from the European Union on January 31. On the day of his departure, an 11-month transition period began, that is, until December 31, with the aim of allowing time to agree on the terms of the future binary system, in particular the FTA.

Failure to do so means that trade between Britain and the European Union will continue from January under general WTO rules, which in turn will lead to the introduction of tariffs in the currently unrestricted bilateral trade.

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