LONDON, March 9 Reuters Euro zone government bond yields dipped across the board on Tuesday before the release of data that is expected to show the euro zone economy contracted in the fourth quarter of the year.
Final numbers on the euro zone economic output are due out at 1000 GMT and market expectations, according to a Reuters poll, are the euro zones economy shrank 0.6 over the previous quarter and 5 over the same period in 2019.
Euro zone government bond yields, which have hit some of their highest levels in nearly a year recently, dipped across the board, a sign of caution before the release.
Germanys 10year government bond yield dropped two basis points to 0.298, moving further away from the oneyear high of 0.203 in late February.
Other euro zone bond yields were also down 1 to 3 basis points across the board.,
Analysts dont expect the economic gloom and the fall in yields to last as vaccination programmes progress in Europe and the United States, fuelling an economic recovery from the COVID19 crisis.
Strong economic performance tends to dampen demand for safe government bonds.
We read price action yesterday, especially the strong rally and rotation in stocks, as a sign of growing confidence in the postCovid recovery, analysts at ING said in a note. In the absence of strong intervention from either the Fed or the ECB, this should bring about higher rates.
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