Make Kitco Your Homepage

German 10-year bond yields hold below 13-month highs

Kitco News

* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Updates prices, adds chart)

LONDON, May 4 (Reuters) - Euro zone government bond yields were largely steady on Tuesday, with Germany's 10-year borrowing costs holding below roughly 13-month highs on signs that world central banks will not rush into tapering their massive stimulus schemes.

Bond yields across the bloc have risen in recent weeks on expectations that a pick-up in the pace of vaccination rollouts will help economic activity bounce back from the COVID-19 shock. German Bund yields rose almost 6 basis points last week in their biggest weekly jump in more than two months.

But having touched multi-month highs on Monday as prices fell, yields steadied as markets appeared to be taking a pause for now.

Germany's 10-year Bund yield was little changed around -0.20%, off more than one-year highs touched on Monday at -0.16%.

New York Fed President John Williams said late on Monday that the recovery so far is "not nearly enough" to prompt monetary policy tightening.

Australia's central bank left its key rates near zero for a fifth straight meeting on Tuesday and pledged to keep policy super loose for a prolonged period even as the economy recovers at a rapid pace from the pandemic-led downturn.

And in the euro area, analysts said signs of a pick-up in European Central Bank bond buying were positive for regional markets.

Data on Monday showed 80 billion euros ($96 billion) worth of bonds was bought under the ECB's PEPP emergency stimulus scheme in April, the first full month after the higher pace was announced in March. That compared with 60 billion euros worth in February.

ECB chief Christine Lagarde has suggested markets focus on the monthly numbers rather than weekly purchase figures, which can be volatile.

"The brisk volumes in the ECB purchase data may have added to the bullish sentiment," said Christoph Rieger, head of rates and credit research at Commerzbank, referring to the pull back in euro area yields late on Monday.

French and Dutch 10-year yields were also off one-year peaks, while Italian borrowing costs were steady at 0.84% -- down from more than seven-month highs hit on Monday around 0.90%.

"We continue to be bearish European sovereigns and particularly Bunds because they remain extremely vulnerable to rises in U.S. Treasuries yields," Saxo Bank chief investment officer Steen Jakobsen said in a note. ($1 = 0.8330 euros)

Reporting by Dhara Ranasinghe; Editing by Kirsten Donovan and Emelia Sithole-Matarise

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.