A rally in Greek bonds continued on Wednesday following the news that Greece will completely lift its capital controls. Greece’s 10-year bond yield touched a fresh record low of 1.811%.
Reuters reports that the euro area’s government bond yields edged back towards record lows on Wednesday as a key part of the U.S. Treasury curve inverted further, fuelling concern that a recession is coming.
Italy’s bond yields steadied after posting their biggest one-day fall in almost two months on Tuesday as the country inched towards the formation of a new government.
Even the brighter tone from the euro zone’s third biggest economy failed to trigger selling in safe-haven German bonds against a backdrop of growing concern about global growth and expectations for aggressive monetary stimulus.
The U.S. Treasury yield curve – as measured by the gap between two and 10-year bonds – is at its most inverted since 2007 on fears that U.S./China trade tensions will tip the economy into recession. The U.S. bond yield curve is widely regarded as a key recession indicator.
In Japan, 30- and 40-year bond government yields hit three-year lows on Wednesday.
Euro zone bond yields edged lower in early trade with Germany’s benchmark 10-year Bund yield at -0.70% – within sight of recent record lows of -0.727%.
“The rally in bonds in the U.S. and Europe is continuing because expectations for a trade deal are moving further away,” said Antoine Bouvet, senior rates strategist at ING in London.