Article / 11 August 2016 at 13:00 GMT

Daily Shot: Bond rally reaches 'fever pitch' Team / Saxo Bank
  • Eurozone bond yields continue to collapse
  • Irish 10-year yield hits new low
  • Spanish yield curve flattening

By Walter Kurtz*

Let's begin with the Eurozone where the broad bond rally has reached a feverish pitch as yields continue to collapse.

1. The Irish 10-year yield dropped below 40 basis points, a new low.

Irish bond yield
2. The French five-year bond yield moved deeper into negative territory.  

French bonds
3. Below is the Italian 10-year bond yield – approaching 1%. The second chart shows a new low for Spain's 10-year government bond yield – firmly below 1%. 

Peripheral bonds Peripheral bonds
4. Moreover, the Spanish government yield curve is rapidly flattening. The second chart below shows the shift over one week. 

Yield curve Yield curve
5. Government paper in the Eurozone is progressively issued at deeper negative yields. Here we have the German 10-year bund and the Italian one-year bill auction prices.

Italy 12-month BOT auction
Turning to Food for Thought, betting markets are showing a rising imbalance in the US presidential election odds.  

US election
Moreover, there is a big shift in the probabilities of which party controls the US Senate after November. 

US election
 — Edited by Michael McKenna

* Walter Kurtz is an alias

** This is an abridged version of the Daily Shot. To subscribe to the full version, link to the Daily Shot and select the appropriate command. E-mail addresses are never shared with anyone.


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