Germany’s bonds advanced, pushing 10-year yields toward the lowest since July, as concern about Deutsche Bank AG’s financial health rattled investors and boosted demand for the euro region’s safest fixed-income securities.
Benchmark 10-year bunds were set for a third week of gains, advancing with their Dutch counterparts, which also have the top AAA grade from the three major rating companies. Deutsche Bank’s shares slid to a record after reports that some hedge funds cut their exposure to the lender.
“We are more in a risk-off, flight-to-quality type of market, with the correlation between stocks and bonds turning with the flight to quality,” said Vincent Chaigneau, London-based global head of rates and foreign-exchange strategy at Societe Generale SA. “I don’t think you really want to fade it. It’s too dangerous right now.”
Germany’s 10-year bund yield fell three basis points, or 0.03 percentage point, to minus 0.15 percent as of 9:54 a.m. London time, having earlier matched the lowest since July 12. The zero percent security due in August 2026 rose 0.325, or 3.25 euros per 1,000-euro ($1,118) face amount, to 101.485.
The nation’s two-year notes headed for a sixth consecutive weekly gain, with yields dropping one basis point to minus 0.70 percent, down three basis points since Sept. 23.
The yield on Dutch 10-year bonds declined two basis points to minus 0.02 percent, while that on similar-maturity Spanish debt was little changed at 0.92 percent.