German bond interest rates heading for zero

German 10-year government bond yields, already at the lowest on record, may drop to near zero, according to Royal Bank of Scotland.

The bank’s analysts are targeting a yield of 0.13% on 10-year bunds by the end of this quarter, about 36 basis points lower than the current level, while “negative yields would not be impossible”, they wrote in a research note published on Wednesday.

The securities were little changed yesterday after German factory orders fell for the first time in three months in November. Spain, and France auctioned debt yesterday.