Maybe declaring Germany’s safe haven status as dead was premature? If this is the market “punishing” Germany for their reluctance to print, there may be some Germans asking for more such pain.
One premise behind the idea that Germany will cave and let the ECB print its way to “salvation” or a bigger crisis, was the failed auction last week. That theory may need to be re-examined in light of this.
Yes, I get that we are now in the middle of a wave of statements and even some actions with the intent of talking the market up, and am not discounting that, but this auction deserves as much attention of the failed auction of last week.
BFW 11/30 11:24 German 1-Year Note Yield Falls Below Zero, First Time on Record
BN 11/30 11:23 *GERMAN 1-YEAR NOTE YIELD FALLS BELOW ZERO, FIRST TIME ON RECORD
German 1-Year Note Yield Falls Below Zero, First Time on Record
2011-11-30 12:03:17.150 GMT
By Paul Dobson
Nov. 30 (Bloomberg) — German one-year notes rallied,
pushing the yield on the securities to less than zero for the
first time, amid speculation the European Central Bank will
intensify its economic stimulus and crisis-fighting measures.
Ten-year German bonds rose for the first time in seven days
after Market News International reported that the ECB may cut
interest rates and boost liquidity available to banks as soon as
Dec. 8, citing people it didn’t identify. Euribor futures
advanced, signaling investors were adding to bets for lower
There are two factors, “one is a debt crisis reason and
one is an ECB policy reason,” said John Davies, a fixed-income
strategist at WestLB AG in London. “That’s unleashed some extra
buying at the short end this morning.”
The one-year note yield fell 13 basis points to minus 0.05
percent at 11:56 a.m. London time. The price of the 1 percent
securities maturing December 2012 climbed 0.13, or 1.30 euros
per 1,000-euro ($1,332) face amount, to 101.075. That’s the
first time the one-year yield has dropped below zero since
Bloomberg began collecting the generic data in 1995.
Euribor futures rallied, pushing the yield on the March
2012 contract eight basis points lower to 1.06 percent.
For Related News and Information:
Top fixed-income stories: TOP BON <GO>
More debt-crisis news: EXT4
Crisis monitor: CRIS <GO>
World bond spreads: WBX
Debt movers: WBMV
–Editors: Mark McCord, Peter Branton
To contact the reporter on this story:
Paul Dobson in London at +44-20-7673-2041 or
To contact the editor responsible for this story:
Daniel Tilles at +44-20-7673-2649 or