Euro zone bond yields up on more promising PMIs
* Euro zone bond yields rise
* PMI data eases recession fears
* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr
(Updates with ECB minutes, updates prices)
By Virginia Furness
LONDON, Aug 22 (Reuters) - Most euro zone bond yields rose
on Thursday after data showed service sector activity picked up
in August and manufacturing contracted less than expected.
Italian government bond yields fell on expectations a new
government will be formed soon, as markets digested news that
Federal Reserve policy makers were divided over the path of
The euro zone's service industry expanded but factory
activity contracted for the seventh month in a row, although at
a slower rate than the previous month, according to IHS Markit's
flash purchasing managers' indexes.
The composite PMI, which combines services and manufacturing
and is considered a good guide to economic health, rose in
August to 51.8 from 51.5 in July, above the 51.2 predicted in a
Reuters poll. Anything above 50 indicates growth.
Across the euro zone, 10-year bond yields were 3-4 basis
points higher on the day, while a key gauge of the market's
long-term inflation expectations rose to a three-week high at
Germany's 10-year bond yields were up 3 bps at -0.64% and
30-year yield rose 4 bps to -0.14%. Thirty-year debt sold for a
record-low yield of -0.11% at an auction on Wednesday but raised
only 824 million euros versus a target of 2 billion euros.
A day after minutes of the Federal Reserve's last meeting
showed the Fed was divided over how to respond to slowing growth
in the United States, minutes from the European Central Bank's
last meeting flagged stimulus is on its way.
A combination of measures may be needed to prop up the euro
zone economy, as recent indicators paint an even bleaker picture
of the outlook, ECB policymakers said at their July meeting.
"For the ECB it is the design of the overall package; there
are so many options. For the Fed there is only how much to cut
and when to cut," said Michael Leister, rates strategist at
Data showed U.S. manufacturing industries recorded their
first month of contraction in almost a decade in August, sparked
a fresh inversion of the U.S. 2-10 bond yield curve
Global central bankers meet at Jackson Hole, Wyoming, for
their annual gathering on Friday, and markets will be looking
for any signals from there.
Italian government bond yields briefly fell after Reuters
reported President Sergio Mattarella wanted clear signs of a
possible deal to form a new government by the end of the day.
In late trade, most Italian yields slightly lower on the
day, with the 10-year Italian/German bond yields gap below 200
bps and close to its tightest in almost a month.
(Reporting by Virginia Furness; Editing by Alison Williams)
First Published: 2019-08-22 09:22:28
Updated 2019-08-22 17:25:27
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