The prices of German Bund features indefinitely declined in its lowest value since the third quarter last year as investors dumped several top-rated bonds in favour of riskier asset based commodities, betting heavily on a further pick-up in global economic growth by the start of this year, 2014.
Top-rated government bonds were able to see a dismissal by the end of last year as the economic outlook significantly improved while the U.S. Federal Reserve announced it will soon commence with its trimming in its bond-purchasing stimulus programme by the first or second quarter of 2014.
Investors will soon be having business surveys by the Eurozone and the U.S., as well as unemployment claims data to search later as the week progresses and check whether growth expectations for the beginning of the new year will be significantly be justified.
Moreover, bond futures were at its recent position, 37 ticks lower at 138 having their lowest hit in the last year at 138.68 after the market had opened. The cash 10-year bund yields surged 3.7 basis points to 1.964 % respectively.
Just recently, the bunds are being hit by heavy pressure and are on back of a strong sentiment. There are expectations that the economic data provided to further the positive news will be reinforced.
Traders are anticipating trade volumes to be in a relative low and the exacerbating market to further move about while a lot of investors are still out on the holidays.
Stubbornly low inflation in the Eurozone as well as several other major economies along with promises by the Fed and The European Central Bank to bolster the interest rates low for much longer period will be expected to cap to U.S. and German yields.
Experts are speculating that the ECB will ease its monetary policy even further more especially if the falling excess in liquidity levels in the banking system will hold the market’s money elevated.
An overnight Eurozone bank-to-bank lending rate ended the previous year at a two-year high of 0.446 % mainly because of a seasonally thin liquidity. Furthermore, experts are clinging to hopes that it will inevitably decline in the coming days, yet the extent of the fall could somehow ignite speculations regarding speculations of the ECB monetary policy easing efforts.