Top-rated Euro zone bond yields declined Friday, right after recent data revealed dismal inflation prospects and heightened deflation risks. An unexpected slowdown in the U.S. economy also contributed to the market’s concern regarding the ongoing global economic slowdown.
Yields for benchmark 10-year German debts continued to decline over the week, finally settling at 0.305 percent, a drop of 5 basis points. Monday, in the wake of the Greek elections, German yields hit a record low of 0.299 percent.
Several other top-rated Euro zone bonds fell as much as 5 to 6 basis points Friday.
Yields for Spanish 10-year debts dropped to as much as 1.43 percent. Italian bonds dropped to 1.60 percent.
Greek bonds continued to rally amid a sell off sparked by the week’s election activity and renewed concerns about the management of the nation’s ‘bailout’ prospects. The nation’s finance minister commented earlier in the week that ‘their government wouldn’t cooperate with the EU/IMF to seek an extension to their bailout.’
Three-year Greek debts saw their yields rise well over 150 basis points, finishing at a 19 percent increase. That was their highest increase since their issuance back in July. Greek 10-year debt yields rose 10.50 percent, a 90 basis points increase.
The Euro zone slowdown is also impacting investor’s positivity: recent data revealed that the union’s annual rate of inflation dropped by as much as 0.6 percent throughout January.
In December, the annual rate of inflation only dropped by as much as 0.2 percent.
The United States also saw a similar result throughout January. On Thursday, the U.S. Department of Commerce reported that the nation’s GDP expanded at an annual rate of 2.6 percent throughout the fourth quarter, just half of the previously reported third quarter figure of 5 percent.
The figure was also lower than economists’ estimates; many forecast a rate growth of at least 3.2 percent.