LONDON: Germany’s 10-year government bond yield bounced off four-month lows after a batch of business surveys delivered healthier-than-expected views of the euro zone economy.
First-estimate purchasing managers’ surveys showed the private sector in Germany, the bloc’s biggest economy, expanded at its fastest pace since August as growth in services activity made up for an easing recession in manufacturing. The coronavirus outbreak, however, may pose a threat to future exports.
Uncertainty stemming from the potential economic impact of the coronavirus outbreak has boosted demand for safe-haven bonds in recent weeks, while money markets have started to price a higher probability of a rate cut from the European Central Bank by the end of the year.
IHS Markit’s flash composite Purchasing Managers’ Index (PMI) for Germany, which tracks the manufacturing and services sectors that together account for more than two-thirds of the economy, beat the consensus forecast in a Reuters poll, although activity growth slowed on the previous month.
Business activity in France and the wider euro zone also expanded faster than expected in February, PMI surveys showed. Ten-year German government bond yields fell to a four month low earlier on Friday at -0.46 per cent, but bounced back up following the PMI release. They were last up 1 basis point at -0.44 per cent.
— Reuters
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