Bund yields near troughs as QE trumps U.S. data, Greek repayment

German Bund yields fell back towards record lows on Friday, as the European Central Bank’s bond-buying programme offset the improving appetite for riskier assets following a Greek debt repayment and the impact of stronger U.S. jobs data.

U.S. workers filing for first-time jobless benefits totalled 281,000 last week, fewer than analysts had forecast, keeping a 2015 Federal Reserve rate hike on investors’ minds.

Greece repaid a crucial 450 million euro loan to the International Monetary Fund on Thursday, easing fears of an imminent default and yields saw their biggest weekly fall in almost two months. Markets in Athens were closed on Friday for the Orthodox Easter holiday.

Greece also won extra emergency funds for its banks, though it remained unclear whether Athens can satisfy creditors on plans for economic reforms enough to release more aid before it runs out of money.

Euro zone partners have given Greece six working days to improve a package of proposed reforms in time for the bloc’s finance ministers to consider whether to release more funds to keep the country afloat when they meet on April 24.

“There was a bit of relief that they made that repayment yesterday and it looks like they’re going to be able to pay that T-bill next week,» Rabobank fixed income strategist Lyn Graham-Taylor said.

“But the market is whipping around. We’re very very far from any sort of resolution that gets us through the next six months to a year.”

German 10-year Bund yields edged up to 0.168 percent, having hit an all-time low of 0.14 percent on Thursday. Eight-year Bund yields were a touch higher, having briefly dipped into negative territory on Thursday.

“After eight-year Bund yields dipped into negative territory yesterday, speculation about testing the zero bound in the 10-year should continue as the amount of QE eligible paper is shrinking while Greek concerns linger,» Commerzbank strategists said in a note.

Other euro zone bond yields were flat to a touch lower.

Greek 10-year yields fell almost 3 percent this week.

Investors have their eyes on ratings reviews for France and Spain by Standard & Poor’s and DBRS later in the day, with some analysts expecting S&P to upgrade their outlook for Spain to «positive» from «stable».


Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.