German Bunds surge but Italy's debt prices sink

Markets 12/6/2018, 12:52 PM
German Bunds surge but Italy's debt prices sink

Markets favored safe haven assets like the yen and benchmark sovereign securities on Thursday over stocks, in continued selloff which included oil and even the spot value of precious metals. Fears strengthened after a top official from Huawei was detained in Canada on a request from the United States, which is beginning difficult talks with China about a comprehensive overhaul in bilateral relations, including trade.

Bonds issued by the government of Germany traded higher, meaning yields declined, but Italy's paper plunged on speculation in the media that the two ruling parties wouldn't accept a meaningful reduction in the budget deficit target for next year. Prime Minister Giuseppe Conte, conversely, indicated it could be cut to as low as 1.9% from 2.4%.

The German two-year yield was down half a basis point at 12:49 pm CET, at a negative 0.606%. The ten-year Bund yield fell 2.6 points to 0.252% and the 30-year measure dropped 2.9 to 0.897%. Corresponding futures rose 0.02%, 0.24% and 0.59%, respectively. Italy's two-year note yielded 0.99% or 9.6 points more for the day. The 10-year note yield rose 6.9 points to 3.13%, compared to a jump of 2.1 points to 3.75% for the 30-year bond gauge.

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