Eurozone bonds gain after ECB's Weidmann signals at bond-buying programme

The European bonds gained on Thursday after the Bundesbank President Jens Weidmann signalled at additional bonds buying programme. Also, the European Central Bank (ECB) in its latest monthly economic bulletin took note of increased uncertainty over the global economic outlook, which also supported investors for safe-haven buying.

The benchmark German 10-year bonds yield, which moves inversely to its price fell 1 basis point to -0.042 percent, French 10-year bond yield dipped 1 basis points to 0.184 percent, Irish 10-year bonds yield moved down 1 basis point to 0.474 percent, Italian equivalents inched lower 2 basis points to 1.197 percent, Netherlands 10-year bonds yield tumbled 1/2 basis point to 0.058 percent, Portuguese 10-year bonds yield dipped nearly 3 basis points to 2.913 percent and the Spanish 10-year bond yield slid more than 1-1/2 basis points to 1.072 percent by 09:00 GMT.

The Bundesbank boss and ECB governing council's Weidmann in an interview said that there is a possibility of adjusting bond-buying programme and allowing special conditions or focusing more on highly indebted countries would further blur the boundaries of monetary and fiscal policy.

Also, said that this could raise questions about ECB independence and also increase pressure to keep interest rates low if highly indebted countries could not withstand a rate rise. Increasingly buying bonds from countries with high debt or bad credit rating would distance Germany from core mandate, he added.

Moreover, the ECB in its recent monthly economic bulletin mentioned that the global outlook has increased and incoming data for second quarter pointed to subdued global activity and trade. Said risks to outlook for global activity and emerging markets in particular remain on downside. The central bank further concluded that the Eurozone markets have weathered post-Brexit uncertainty, volatility with encouraging resilience and economic recovery expected to proceed at moderate pace.

Lastly, Investors are awaiting the Bank of England’s monetary policy decision, which is scheduled to take place on August 4 at 11:00 GMT.

Meanwhile, the pan-European STOXX 600 index was up 0.29 percent and the euro-area blue-chip gauge, the STOXX 50 jumped 0.78 percent. The DAX trading 0.68 percent higher and the CAC-40 rose 0.26 percent by 09:30 GMT.