European Bond Market: German Bonds Rise but Lag Behind US Treasuries as US Retail Sales Fall Short of Expectations

The German government bond yield curve flattened in a bull market but underperformed US Treasuries, which led gains after December US retail sales unexpectedly stagnated. The eurozone bond rally was further supported by strong demand for German, Dutch, and Austrian bond issuance. EU debt issued in two tranches through banks also attracted substantial subscriptions.

The German 10-year government bond yield is heading toward its lowest closing level in more than two months, while yields on French and Italian bonds of the same maturity have fallen to their lowest since November.

Bonds issued by Germany and Greece on Wednesday were mainly of longer maturities; France is expected to issue 30-year bonds through banks.

The UK government bond yield curve also flattened in a bull market, but underperformed both German and US government bonds, as Prime Minister Keir Starmer attempts to quell internal party disputes.

Market:

German government bond yields fell by 4 basis points to 2.80% (UTC+8);

German government bond futures rose 30 points to 128.61 (UTC+8);

Italian 10-year government bond yields fell by 4 basis points to 3.41% (UTC+8);

French 10-year government bond yields fell by 4 basis points to 3.40% (UTC+8);

10-year UK government bond yields fell by 3 basis points to 4.50% (UTC+8).

Editor: Ding Wenwu