5/31/2019, 8:49 AM (Source: TeleTrader)
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German 10-year Bund yield looking at record low

The decision by United States President Donald Trump to escalate the dispute with Mexico about illegal immigration by slapping 5% tariffs on goods from the neighboring country sparked risk aversion among investors on Friday. Besides the flight to the relative safety of the Japanese yen, the benchmark government bonds benefited the most, taking yields to new lows.

Germany's ten-year rate, which spent most of this month below zero, slumped 2.4 basis points to a negative 0.195% at 8:48 am CET. It was last lower on July 6, 2016, when it reached a record low at minus 0.205%. Corresponding futures gained 0.12% as stocks in Europe dived before the opening bell. The Eurozone's largest economy is experiencing weakness, with a contraction in manufacturing. Bunds have risen also together with Italy's renewed budget row with the European Union.

The two-year yield declined 2.3 points to 0.66% under the neutral mark, and the yield on the 30-year bonds dropped 2.7 points to 0.443%. The equivalent futures prices advanced 0.02% and 0.37%, respectively.

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