Germany’s benchmark 10-year bond yield fell slightly on Wednesday to below a recent three-month high, as the European Central Bank resumed its asset-purchase program and investors awaited the outcome of a US Federal Reserve meeting.
Bond yields across the eurozone have risen in the past month as the prospect of a no-deal Brexit has faded, but the resumption of the ECB’s bond-buying scheme to bolster growth and inflation was expected to support regional bond markets.
The ECB said in September it would buy 20 billion euros’ worth of bonds a month.
“It will be first orders [from the ECB on Wednesday], but it’s more the stock effect that is having market impact, not the flow effect,” said Daniel Lenz, rates strategist at DZ Bank.
The ECB holds over 2 trillion euros’ worth of bonds, which has put significant downward pressure on yields since the original quantitative easing program was launched in 2015.
Its new round of asset purchases is expected to support bonds, although analysts say the overall impact this time will be limited.