Euro zone bond yields rise as oil jumps, supplies

Credit: REUTERS/KAI PFAFFENBACH

By Tommy Wilkes

LONDON, April 2 (Reuters) - Euro zone government bond yields rose on Thursday as some investors moved back into riskier assets, with a rise in oil prices and fresh supply from France and Spain also adding to the upwards pressure.

Stocks were mostly mixed as data suggested the pace of new coronavirus infections was slowing in some countries, but the economic toll of the shutdowns was growing.

A jump in oil prices after U.S. President Donald Trump said he expected Saudi Arabia and Russia to reach a deal soon to end their oil price war helped improve the general tone in markets.

The 10-year German government bond yield rose 4 basis points to -0.426% DE10YT=RR, pulling away from the lows of -0.55% touched on Monday.

Other core euro zone bond yields were also higher. However, Italian yields fell.

Italian yields often move inversely to the rest of the euro zone bond market, with investors buying Italian bonds when risk sentiment picks up. The 10-year yield dropped 7 basis points to 1.481% IT10YT=RR, while the two-year note was down 6 basis points at 0.358% IT2YT=RR.

This week has been a busy one for new debt issuance, with Belgium and Portugal having already enjoyed strong demand and Spain and France selling bonds on Thursday despite tricky market conditions.

Analysts said many investors would look to primary markets and demand for new government debt as a guide.

Wall Street bounced as a recovery in oil prices outweighed the shock of weekly jobless claims soaring past 6 million.

Oil prices jumped after U.S. President Donald Trump said he expects Russia and Saudi Arabia to announce a major oil production cut, and Saudi state media said the kingdom was calling an emergency meeting of oil producers to deal with the market turmoil. O/R

Unicredit analysts noted that the Federal Reserve had overnight announced it would temporarily ease some capital requirements for banks, which it expected to continue to put pressure on Treasury yields.

($1 = 0.9149 euros)

(Reporting by Tommy Reggiori Wilkes, editing by Larry king, Susan Fenton, Kirsten Donovan)

((thomas.wilkes@tr.com; Reuters Messaging: thomas.wilkes.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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