Bonds had a pretty weak day yesterday - Deutsche Bank

FXStreet (Łódź) - Jim Reid from Deutsche Bank points out that government bonds yelds grew in Europe and the US on Tuesday, adding however that the former finihed the day off their intraday highs.

Key quotes

"Indeed the 10yr government bond yields in Germany, Spain, and Italy closed 4bp, 11bp, and 7bp higher at 0.996%, 2.200%, and 2.367% respectively having been 3-7bps higher at the lows."

"This was also the first time 10yr Bund yields traded above 1% since 22 August."

"It is also ironic that Gilts (+1bp) were one of the best performing global government bond markets yesterday given that the surging YES momentum in next week's referendum continues to send shock waves through the likely impacted areas."

"We couldn't really pin-point a single driver for the yesterday’s moves in Bonds. In reality there could have been some profit taking following the recent gains but generally sentiment was also weighed by comments from ECB’s Liikanen who said that the ECB hasn’t made any decision on the scale of ABS and Covered bond purchases."

"Adding to that, Bloomberg news saw a draft document who noted that France and Germany are not interested in providing state guarantees for the program."

"Delays in Russian sanctions by the EU may have also helped unwind some safe-haven flows."

"Demand for US Treasuries also waned with the 10yr yield rising for its fourth consecutive trading session (its longest weakening streak since June). The 10yr closed 3bps higher at 2.504% but is trading slightly better at 2.491% in the Asian session overnight."