RTRS: German long-bond yields up on U.S. inflation worry
Nov 4 (Reuters) - Ten- and 30-year German government bond yields rose above key levels on Thursday as investors' fears grew for rising U.S. inflation, while the Bund future fell by nearly a full point.
The 10-year Bund yield DE10YT=TWEB rose above the psychologically important level of 2.5 percent while the 30-year Bund yield crept above 3.0 percent DE30YT=TWEB.
The December Bund future FGBLc1 dropped to a session low of 129.33, down 91 ticks on the day.
Bunds reacted to news that the Federal Reserve plans to buy $600 billion of mostly shorter-dated U.S. Treasury notes until end of 2011, leaving the ultra-long T-Bond market under pressure.
The 10-year U.S./German bond yield spread US10YT=RRDE10YT=RR narrowed by six basis points to six basis points on the day, mostly as Bund yields rose in sympathy with 30-year Bunds.
"The spread between 10/30 year U.S. bonds is about 150 basis points. For Bunds the equivalent spread is about 50 bps. So Bunds are playing catch-up now that we know inflation is a worry for the U.S. economy," Marc Ostwald, a bond strategist at Monument Securities in London said. (Reporting by George Matlock)
