(Bloomberg) -- European bonds kicked off 2019 with a bang as poor manufacturing data sparked global growth concerns, rekindling demand for the safety of government debt.
Gilts led gains across the continent and yields on 10-year German notes fell to the lowest since April 2017. That came as a Spanish purchasing manufacturing index for December fell below expectations and other European releases failed to bolster investor confidence after data from China posted the lowest reading in 18 months.
“With equities opening sharply lower, a risk-off tone in European government bonds quickly took hold,” said Martin van Vliet, senior interest-rate strategist at ING Groep (AS:INGA) NV.
Yields on 10-year German bonds dropped six basis points to 0.18 percent, while those on gilts fell seven basis points to 1.21 percent. Equivalent Treasury yields declined two basis points to 2.66 percent.
Vliet said it’s too early to know if this signals a trend toward even lower core yields in early 2019 given a wave of planned bond selling by European governments in coming weeks. Spain, Germany and the U.K. are set to issue debt in the next week.