Breaking News

Sovereign Yields Plunging In Europe

By Ed YardeniBondsMay 08, 2014 12:21AM ET
Sovereign Yields Plunging In Europe
By Ed Yardeni   |  May 08, 2014 12:21AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

10-Year Government Bond Yields: Eurozone
10-Year Government Bond Yields: Eurozone

More surprising than the rally in US Treasury bonds is the plunge in Eurozone government bond yields, especially in the peripheral countries. The German and French yields are both back below 2.00% at 1.37% and 1.94%, respectively. The Italian and Spanish yields are at 3.02% and 2.98%, respectively, with the Italian yield down 108bps ytd and 140bps since the start of last year; the Spanish yield is down 116bps and 220bps over the comparable time periods. They were both around 7.00% during the summer of 2012. To global bond investors, US Treasury yields of 2.50%-3.00% must be very attractive given how low rates have fallen in the Eurozone.

The plunge in Eurozone yields reflects mounting concerns about deflation in the region. The Eurozone’s core CPI inflation rate has dropped from a recent high of 1.7% y/y during July 2012 to 1.0% during April of this year. Inflation is also low in the US with the core PCED up 1.2% y/y during March, down from a recent high of 2.0% two years ago. Interestingly, the expected inflation rate implied by the 10-year TIPs yield has remained remarkably stable around 2.2% since mid-2013.

Today's Morning Briefing: Vagabonds & Vigilantes. (1) QE tapering: Bonds were sold on the chatter, bought on the news. (2) A range-bound forecast. (3) Bond Vigilantes want to know: “Who are those masked vagabonds buying bonds?" (4) New pension fund rules in Budget Act of 2013. (5) Portfolio rebalancers. (6) Individuals are back. (7) Fed isn’t done buying just yet. (8) Yields plunging in Eurozone. (9) Inflation remains subdued, and global growth is slow. (10) NZIRP for the foreseeable future. (11) Yellen is watching “disappointing” housing activity. (12) Bonds displacing gold as the new safe haven.

Core Consumer Inflation: U.S. vs Europe
Core Consumer Inflation: U.S. vs Europe

Sovereign Yields Plunging In Europe
Sovereign Yields Plunging In Europe

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Are you sure you want to delete this chart?
Write your thoughts here
Replace the attached chart with a new chart ?
Post also to:
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Post 1000
Please wait a minute before you try to comment again.
Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Add Chart to Comment
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email