Ukraine concerns drive German bond yields to an historical low
GERMAN bond yields touched another historical low yesterday, with the benchmark 10 year bond’s yield dropping to just 1.1 per cent, down from just below two per cent at the beginning of the year.
Some analysts attributed a build up of Russian troops on the Ukrainian border as one of the reasons for the drop. Buying German government debt is seen as a safe form of investment.
The German Dax index of equities also took a knock yesterday, ending 0.65 per cent lower than the previous close, dropping to 9,130.04 points.
Despite investors’ vote of confidence in Berlin, figures released yesterday showed that German factory orders dropped by 4.3 per cent between June 2013 and June this year, a larger fall than was expected.
Other national governments in the Eurozone have seen bond yields drop to their lowest ever levels this year. Extremely low inflation in the region has helped to bring the yields down, with weak price growth compensating in part for smaller interest payments.