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Currency Analyst since 2010

European yields are falling

Spanish and Italian bond yields hit the latest in a series of record lows on Tuesday with investors looking to 60 billion euro of coupon and debt repayments from the two countries this week to return to the market.

Yields on 10-year German bonds, the benchmark for euro zone borrowing costs, also touched all-time lows with the prospect of a fresh round of long-term loans to banks from the ECB (TLTRO) from September also supporting demand for euro zone bonds.

Italy is the only euro zone country selling bonds this week, so there may be enough cash to keep the euro zone yields subdued at or near historic lows.

Green line – Italian 10-year bond yield

Orange line – Spanish 10-year bond yield

Yellow line – German 10-year bond yield

Source: Bloomberg

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