German average bond yield negative for first time

The average yield on German government debt has dropped below zero for the first time, an indicator of how the ECB’s bond-buying programme has made the previously unthinkable a reality.

German average bond yield negative for first time

Price gains on German bonds pushed yields through January 2024 below zero, driving the average yield to maturity on securities in the Bloomberg Germany Sovereign Bond Index to minus 0.003% at Wednesday’s close.

That means investors are prepared to accept losses for holding to maturity $809bn (€756bn) of the $1.16 tn total of bonds in the index. The yield on 10-year bunds, the eurozone’s benchmark, fell below 0.10%, yesterday, for the first time on record.

The bond-market rally reflects the demand for government debt in the wake of the ECB’s €1.1tn quantitative-easing plan. Yesterday, ECB president Mario Draghi said that the policy makers’ plan must be implemented in full to work, adding more fuel to a rally that is already pushed yields across the region to record lows.

Yesterday, German 10-year yields dropped two basis points to 0.09% and touched 0.086%, the lowest since Bloomberg started tracking the data in 1989. The yield on German 30-year bonds fell below 0.5% for the first time.

Bloomberg

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