Germany’s 10-year borrowing rate fell to -0.39% from -0.34% on Friday at the close.
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The European debt market eased on Monday, fully playing its role as a safe haven during a session where the equity markets unscrewed, worried about the impact of the deadly coronavirus from China.
This easing is explained by “fears of an event linked to the Chinese virus, the idea that this could have an effect on the slowdown in the Chinese economy and even the world,” points out Jean-François Robin, bond strategist at Natixis .
“This uncertainty weighs on stocks and the environment is very favorable to the safest assets, and therefore to government bonds,” he added.
Anxiety is mounting around the world around this epidemic of viral pneumonia which has left 81 dead and 2,744 cases.
Mongolia has closed its borders, Germany has advised against trips to China and other countries like France and the United States are preparing repatriation actions for their nationals from the city of Wuhan, the epicenter of the epidemic.
Anxious to further limit the influx in transport during the Lunar New Year, China suspended touring on Monday, a blow to tourism, heavyweight of the economy with 11% of GDP in 2018, according to official figures.
At 6:00 p.m. (5:00 p.m. GMT), Germany’s 10-year borrowing rate fell to -0.39% from -0.34% on Friday at the close of the secondary market, where the already issued debt is traded.
The yield with the same maturity in France followed the same downward trend, at -0.13% against -0.08%, like the Spanish 10-year borrowing rate, at 0.27% against 0, 34%.
The UK 10-year yield also eased to 0.51% from 0.56%.
“In this context, normally the safest debts like that of Germany should + outperform.” But what’s interesting is that it’s the Italian and Greek debts that benefit the most, ”said Robin.
Italy’s ten-year yield eased significantly to 1.03% from 1.23%, thanks to the decline of the far right in an election in Emilia-Romagna.
Greece’s 10-year yield also eased to 1.15% from 1.28% on Friday. The country is benefiting from the upgrade of its rating by the agency Fitch, to BB with positive outlook.
In the United States, the 10-year borrowing rate fell to 1.60% from 1.68%, as did the 30-year borrowing rate to 2.06% against 2.13%. The one at two years stood for 1.44% against 1.49%.
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