German yields on track to end the week higher after Fed, US data

BY Reuters | ECONOMIC | 09/20/24 03:10 AM EDT

Sept 20 (Reuters) - Euro zone government bond yields were on track to end the week slightly higher as the U.S. Federal Reserve policy meeting and jobs data fuelled appetite for risky assets.

Investors expect rates to fall further as the Fed won its battle against inflation.

German 10-year Bund yields were flat at 2.19%, and on track to end the week four basis points (bps) higher.

Bond prices move inversely with yields.

Money markets have fully priced in a 25 basis point (bp) rate cut by the European Central Bank in December and see about a 25% chance of a further move this year.

Germany's 2-year Schatz yields were flat at 2.22% and on track to close the week up one bp.

They were yielding 3 bps less than German 10-year debt . They hit their highest level since November 2022 on Sept. 11 when they were yielding 2.60 bps less.

Italian 10-year yields were down 1.5 bps at 3.54%, with their premium over Bunds at 134 bps.

(Reporting by Stefano Rebaudo; editing by Jason Neely)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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