Bonds: Traders take position ahead of ECB meeting

These were the movements in some of the most widely-followed 10-year sovereign bond yields:

UK: 1.47% (+9bp)

US: 1.88% (+5bp)

Germany: 0.24% (+6bp)

Spain: 1.57% (-0bp)

France: 0.63% (+5bp)

Italy: 1.41% (-1bp)

Portugal: 3.16% (-1bp)

Japan: -0.02% (+8bp)

Greece: 9.40% (-2bp)

Yields on Gilts moved sharply higher on Wednesday as traders positioned for the European Central Bank’s policy meeting scheduled for the next day.

Traders had moved to price-in a 90% probability the ECB would cut its deposit rate by ten basis points to -0.40% and 10% odds of a larger 20 basis point move, according to calculations from Bloomberg.

Eurozone periphery bond yields were the exception, with Madrid having managed to hive off €5bn in 30-year securities via a syndicate of banks, drawing more than €14bn of bids, Bloomberg reported, citing a person familiar with the matter.

Belgian and French two-year note yields declined to record lows amid speculation ahead of the ECB’s meeting, hitting levels of -0.497% and -0.468%, respectively.

On 8 March, Berlin Hyp AG, which is owned by Germany’s savings banks, auctioned €500m worth of three-year covered bonds which were priced to go at -0.162%, in effect getting paid to borrow – at least in nominal terms.

That was the first corporate deal sold at negative rates.