LONDON, Feb 8 (Reuters) - German Bund futures fell to their lowest since early January on Wednesday, following
a late jump in yields the previous day after the European
Central Bank said it would cut the interest rate it pays
governments on deposits.
Ten-year Bund futures fell by as much as 0.64% in early
trading to 135.82 points, its lowest since January 6, reflecting
an 8-basis point rise in two-year cash yields after
the ECB's announcement.
The ECB, which is fighting runaway inflation with steady
rate hikes, started to remunerate public-sector deposits late
last year to prevent that cash from flooding the fixed-income
market, where top-rated government bonds have become scarce
after years of ECB purchases.
By cutting the rate it pays, the ECB is giving governments
in the euro zone an incentive to deploy some of their cash,
rather than leave it parked at the central bank.
(Reporting by Amanda Cooper; Editing by Harry Robertson)
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.