Investors ran for the safety of top-rated German debt and ditched bonds in riskier Southern Europe on Friday as Britain’s vote to leave the European Union gave eurozone markets their biggest shock since their 2012 crisis.
German bond yields – an indication of government borrowing costs – dropped to record lows while equivalents in Greece, Spain, Italy and Portugal shot to multi-month highs.
German yields across all maturities plumbed record lows, with the 10-year benchmark falling as low as minus 0.17 percent, on track for its biggest drop since the height of the eurozone crisis in August 2012.
US Treasury prices also soared on the rush into safe-haven assets, with 10-year yields tumbling to 1.41 percent.
“It’s a day where investors don’t care about yield, they are gravitating towards safe-haven bonds,” said Jack McIntyre, portfolio manager at Philadelphia-based Brandywine Global Investment Management.
In Portugal and Greece, the two junk-rated borrowers in the eurozone, yields surged 27 and 95 basis points, respectively, although all peripheral yields pulled off their highs with traders saying the European Central Bank’s asset purchases had helped calm markets.