Euro Zone Bond Yields Fall as Vaccine Optimism Fades

AMSTERDAM, Nov 12 Reuters Euro zone bond yields fell in early trade on Thursday as caution replaced enthusiasm over COVID19 vaccines, while focus also remained on the European Central Bank.

ECB President Christine Lagarde said on Wednesday the bank will focus on more emergency bond purchases and cheap loans in its new stimulus package, due in December. Yields pulled back after bond prices fell earlier in the week on news of the Pfizer vaccine.

On Thursday, Germanys 10year yield was down 2 basis points to 0.52 in early trade.

UniCredit analysts noted that while European equities have gained and broken out of their recent trading range on the vaccine news, the Bund yield remains within its recent trading range and near its average since April.

This suggests that … investors are pondering with caution the implications of the vaccine on the economy, they said in a note, adding that concern over lockdowns may outweigh optimism around a future vaccine.

The moves showed the ECBs policy rate at 0.50 provides a support level for the benchmark Bund yield, said Michael Leister, head of interest rate strategy at Commerzbank. He expects Lagardes reassurances to continue resonating with the market.

Italian bonds, which outperformed after Lagarde spoke on Wednesday, saw 10year yields down 1 basis point on the day in to 0.69..

Central banks will again be on focus on Thursday, with Lagarde due to speak together with Bank of England Governor Andrew Bailey and Federal Reserve…

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