The omicron concerns reduced the yield of the Eurozone government bonds

In connection with the launching of European countries’ restrictions due to the spread of a new coronavirus strain, safe assets began to be used in increased demand in the Eurozone, reducing the yield on government bonds. Given the upcoming Christmas and New Year holidays, European authorities are considering reducing the danger of spreading the omicron strain by introducing restrictions. At the same time, the Dutch authorities have already launched a lockdown this Sunday. Against this backdrop, the yield on 10-year German bonds fell to their lowest level since December 8, amounting to minus 0.402%. The decrease is also proven by the cost-effectiveness of government bonds of other European countries. At the same time, the drop in the yield on ten-year US government bonds amounted to 3 basis points, its level fell to 1.36%. Many experts deem that the safe bonds rise, fueled by concerns about the omicrons proliferation, may be constrained by expectations about the alleged hawkish measures of the European Central Bank, whose representatives say that the regulator is ready to adjust its policy if inflation continues to intensify.

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Arseny Kudrin

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