Investors buy German Bunds at record negative yields, amid uncertainty over Euro periphery

On Wednesday Germany again sold 2 year-Bunds at negative yields. The yield was at 0.06%. This was the lowest value ever. The yield was at 0.06%. This was the lowest value ever. At the moment these are perceived to be a safe haven in the bond market amid ongoing uncertainties in Spain and Italy.

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Bad news is arriving from Italy (with the possible bust of Sicily) and Spain (with the bad loans and capital flight). The Euro area did not manage to make the financial markets calm down a bit as European politicians had hoped for. At yesterday’s auction, particularly Spanish banks bought a lot of national sovereign debt because international investors are hesitating to take any further risks. In late trading on Wednesday, 10 year sovereign debt came close to 7% again, a limit where debt is widely regarded as not sustainable. Germany on the other hand is seen as a safe haven with ongoing investment flow into the bunds.

Spanish 10 year sovereign debt came under pressure on Wednesday. (Chart: Bloomberg)

Spanish 10 year sovereign debt came under pressure on Wednesday. (Chart: Bloomberg)

Since the opening bell they have fallen 23.4% down to negative 0.058%.

However, Germany currently has today record-high interest rates but is the not the only “safe haven” that attracted investors. In France, 10 years bonds fell to 2,068%. Also in Austria long term bonds have reached a new record low of 1.86%. Similar circumstances happened in the United Kingdom where the yield of two year life fell to 0.168%.

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