Euro zone bond yields dip as oil declines
TLT•TLT•TLT•TLT•Euro zone bond yields broadly fell as oil prices declined. German 10-year yields dropped 1.1 basis points to 3.34%, while French 10-year yields were steady at 4.91%; markets priced a high chance of an ECB hike in December and a second hike by April.
German 10-year Bund yields fell 1.1 basis points to 3.34%, while French 10-year OAT yields were steady at 4.91% after dropping about 11 basis points on Monday. Oil prices were down 1.7% at $113.85 a barrel as attention turned to possible progress in Middle East peace efforts.
Investors have increasingly turned to German bonds as concern grows about highly indebted euro zone countries. Germany sold about €3.8 billion in two-year debt at an average yield of 3.08%, with its bid-to-cover ratio rising to 1.3 from 1.1 at the previous sale. Belgian 10-year yields were up just over 1 basis point at 4.4%.
The European Central Bank is widely expected to leave rates unchanged on Thursday. Money markets priced a high chance of a rate hike in December and fully priced a second by April, with investors focused on any comments from President Christine Lagarde.
