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UPDATE 1-Coronavirus treatment optimism ends Bund rally

Mon, 24th Aug 2020 12:46

* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr
(Adds details, comment, updates prices)

By Yoruk Bahceli

AMSTERDAM, Aug 24 (Reuters) - Safe-haven German bond yields
rose on Monday after their longest decline this year as hopes
for a coronavirus treatment boosted risk appetite.

Global shares rose on Monday after the U.S. Food and Drug
Administration authorised the use of blood plasma from recovered
patients as a coronavirus treatment option.

Safe-haven German 10-year yields rose 1 basis point to
-0.49%, ending six consecutive sessions of declines,
the longest since January.

Italy's 10-year bond yield was last up 1 basis point to
1.02%, after touching a one-week high in earlier trade.
.

"The improvement in sentiment I find fairly fickle and hard
to really extrapolate from," said ING senior rates strategist
Antoine Bouvet.

"I would be tempted to say the outlook for the rates in the
near term is lower, not higher, because we're heading into
month-end, which is giving a bit of a technical thrust to
Bunds," he said, expecting another rally at the end of the week.

Without data releases to move the market on Monday,
attention was turning to a speech by Federal Reserve Chair
Jerome Powell on Thursday, where he will discuss the bank’s
monetary policy framework review.

Still, 10-year Bund yields are hovering around -0.50%.
Analysts don't expect them to fall much lower below -0.50%, the
European Central Bank's deposit rate.

"The market is eyeing up what's to come in September, and in
EGBs (European government bonds) this will mean supply, but also
the ECB becoming more active with their QE (quantitative easing)
programs," analysts at Mizuho told clients.

"This pick-up is more likely in the first week of September
than the one coming, but the market will be pre-empting this
buying."

Later on Monday, investors will watch the European Central
Bank's weekly publication of the breakdown of its conventional
bond-buying programmes, which have remained subdued in recent
weeks during summer trading.

Germany is planning on issuing at least 4 billion euros via
its debut green bond in September, German finance ministry
official Joerg Kukies said on Monday.

It plans another green bond issue in the fourth quarter,
meaning the total volume of Germany's green bonds could reach 11
billion euros this year.

Belgium sold 1.5 billion euros of 10-year bonds via auction
on Monday.

(Reporting by Yoruk Bahceli, editing by Larry King)

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