BLBG:German Bunds Snap 3-Day Fall Before Euro-Area Retail Sales Data
German 10-year bunds snapped a three-day decline before a report economists said will show euro-area retail sales fell in July, supporting the case for the European Central Bank to cut interest rates this week.
Two-year yields were less than zero for a 10th day. Sales slipped 0.2 from June, when they advanced 0.2 percent, the European Union’s statistics office in Luxembourg will say today, according to the median prediction of 21 economists surveyed by Bloomberg. German bunds rose even as the country prepared to auction 5 billion euros ($6.3 billion) of the debt today. The Netherlands will sell $2 billion three-year notes.
Germany’s 10-year yield fell one basis point to 1.38 percent at 7:15 a.m. London time, after rising seven basis points in the past three days. The 1.75 percent bond due in July 2022 gained 0.11 or 1.10 per 1,000-euro face amount, to 103.38. The two-year rate was at minus 0.04 percent.
German bonds, perceived to be among the region’s safest securities, have been supported as reports signaled that the 17- nation euro economy is headed for a recession. Investors also sought the securities as a haven as the region struggled with a debt crisis that’s been running for almost three years.
Germany last sold 10-year bunds on Aug. 8, at an average yield of 1.42 percent, compared with a record low auction yield of 1.31 percent on July 11.
The European Central Bank will cut its benchmark interest rate by 25 basis points to 0.50 percent tomorrow, according to the median forecast of 58 economists surveyed by Bloomberg. ECB President Mario Draghi may also unveil the central bank’s bond- purchase strategy.
German government bonds returned 3.7 percent this year through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies.
To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net; Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net;
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
