German Bunds Slide As Canadian Wildfire Threatens Crude Oil Output
The German bunds plunged on Thursday as investors cooled on safe-haven assets amid gains in riskier assets including stocks and oil. The yield on the benchmark 10-year bonds, which moves inversely to its price rose 1bps to 0.214 pct and the yield on the 3-year bonds climbed 1 bps to -0.488 pct by 0725 GMT.
The German bunds have been closely following developments in oil markets because of their impact on inflation expectations. Today, Oil prices jumped by more than 2 pct in early trading on Thursday as a huge wildfire in Canada disrupted its oil sands production, while escalating fighting in Libya threatened the North African nation's output. The International benchmark Brent futures rose 2.04 pct to $45.53 and West Texas Intermediate (WTI) climbed 2.22 pct to $ 44.77 by 0725 GMT.
On the other hand, the gap between Italian and German government borrowing costs hit its widest level in 9-weeks on Thursday after Rome announced an unscheduled bond exchange and investors braced for a series of upcoming political events in Europe.
"Looking forward there is a bit of supply to be absorbed this week and market sentiment is poor...so we are cautious on the direction for the periphery and expect more volatility," says Antoine Bouvet from Mizuho Corp. Bank in a research note to Reuters.
Meanwhile, the German stock index DAX Index rose 0.10 pct at 9,838 by 0725 GMT.