Tradeweb Government Bond Update - September 2019

Oct. 14, 2019 11:00 AM ETBNDX, GIM, BWX, IGOV, FIXD, DIAL, GLBY, FLIA, IGVT
Tradeweb profile picture
Tradeweb
117 Followers

Summary

  • Government bond yields started rising again in September, following several months of record-low levels around much of the globe.
  • Joining the ECB, Denmark's central bank cut its key deposit rate to -0.75%, a record-low for developed economies.
  • As per market expectations, the Federal Reserve cut the federal funds range by 25 basis points to 1.75-2.0%, the second cut in a row.

Government bond yields started rising again in September, following several months of record-low levels around much of the globe. Only Greece and Italy bucked the trend, with the mid-yield on their 10-year benchmark notes dropping by 22 and 21 basis points to end the month at 1.27% and 0.81%, respectively. Greek Prime Minister Kyriakos Mitsotakis announced tax changes and structural economic reforms aimed at rebuilding confidence with the country's investors. Meanwhile, his Italian counterpart Giuseppe Conte took over a coalition government amid ongoing discussions with the European Commission on how to balance debt reduction and economic growth.

Elsewhere in Europe, the largest upward move came from Germany's 10-year Bund yield. Despite an increase of 13 basis points, it finished in negative territory for the fifth consecutive month, this time at -0.58%. On September 12, the ECB cut its deposit rate from -0.4% to a new record low of -0.5% and announced it would restart bond purchases at a monthly pace of EUR 20 billion from November 1. Joining the ECB, Denmark's central bank cut its key deposit rate to -0.75%, a record-low for developed economies. The Danish 10-year government bond yield closed the month 12 basis points higher at -0.56%.

In the UK, 10-year gilt yields rose by just over a basis point to end September at 0.49%. The Bank of England decided to leave its monetary policy unchanged, keeping rates at 0.75%. Canada's central bank adopted a similar approach and left its key rate at 1.75%, but signaled it was ready to adjust lower if necessary. After a somewhat volatile month, the yield on Canada's 10-year benchmark note climbed 20 basis points to finish at 1.36%. The U.S. Treasury 10-year mid-yield also experienced volatility during the month, increasing by nearly 17 basis points to 1.67%. As per market expectations, the Federal Reserve cut the federal funds range by 25 basis points to 1.75-2.0%, the second cut in a row.

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

This article was written by

Tradeweb profile picture
117 Followers
Tradeweb Markets Inc. (Nasdaq: TW) is a leading, global operator of electronic marketplaces for rates, credit, equities and money markets. Founded in 1996, Tradeweb provides access to markets, data and analytics, electronic trading, straight-through-processing and reporting for more than 40 products to clients in the institutional, wholesale and retail markets. Advanced technologies developed by Tradeweb enhance price discovery, order execution and trade workflows while allowing for greater scale and helping to reduce risks in client trading operations. Tradeweb serves approximately 2,500 clients in more than 60 countries. In an average trading day, Tradeweb facilitates more than $570 billion in notional value.
Follow

Recommended For You

Comments

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.