Bloomberg News

German Two, Five-Year Yields Drop to Records: Frankfurt M

July 18, 2012

Two- and five-year German government notes advanced, pushing yields to record lows, as investors sought the nation’s debt as a haven.

The five-year yield fell as much as 4 basis points to 0.254 percent, the lowest level since Bloomberg began tracking the data in 1990. The two-year note yield fell to a record minus 0.074 percent.

Germany today sold two-year securities at a negative yield for the first time. The Frankfurt-based Bundesbank allotted 4.17 billion euros ($5.11 billion) of notes with an average rate of minus 0.06 percent.

“Investors who bought the two-year notes were seeking quality and security, for that they accept lower returns,” said Boris Knapp, spokesman at Germany’s Finance Agency in Frankfurt. “The market is still under pressure,” he said in a telephone interview today.

German borrowing costs have plunged over the past year as investors sought the safest investments to shield themselves from Europe’s financial turbulence. Such low borrowing costs help German Chancellor Angela Merkel as she seeks to reduce Germany’s debt burden. Meantime, rates in Italy and Spain have surged, with 10-year yields topping 6 and 7 percent respectively.

“There is clear need for safety,” Citigroup Inc. strategists Tom Fitzpatrick and Shyam Devani said in a note to clients today. “We are increasingly seeing a more divided, two- tier Europe.”

Merkel said today that the “European project” might be at risk unless policy makers work harder. She spoke in an interview on her party’s website.

To contact the reporter on this story: Janhenrik Forster in Frankfurt at

To contact the editor responsible for this story: Tom Kohn at

Toyota's Hydrogen Man
blog comments powered by Disqus