German 10Y bund yield dip below zero for the first time on rising support for Brexit

The German benchmark 10-year bund yield fell below zero for the first time on Tuesday after recent four polls suggested Britain is on course to leave the European Union. Also, weak crude oil prices shifted investors’ interest towards fixed income securities.

Meanwhile, the yield on the benchmark 10-year bonds, which moves inversely to its price fell nearly 6 basis points to -0.029 percent, yield on super-long 30-year bonds dipped more than 8 basis point to 0.550 percent and the yield on short-term 2-year note tumbled 3-1/2 basis point to -0.582 percent by 09:30 GMT.

The latest polls by various corporate bodies in the United Kingdom in run up to the June 23 Brexit referendum indicate that the percentage of citizens in favor of "leaving" the European Union (EU) has outnumbered those who want to "remain", raising the possibility that Britain might leave the EU after 43 years of membership in the bloc.

According to a recent poll on Brexit by YouGov, showed 46 percent of participant are in favour of ‘Leave’ while 39 percent wanted to ‘Remain’, rest being indecisive. Further, a new UK poll on the EU by ICM for the Guardian shows a 6 percent lead for the Leave side (53-47 percent), when undecided of 6-7 percent were excluded. Reportedly the results were the same for polls conducted online and by phone. This contrasts with prior rumours of a similarly-sized pro-Remain balance.

According to the latest Betfair odds, the implied probability of the UK voting to remain in the EU has now fallen to 55 percent, down from 59 percent earlier and around 64 percent yesterday. Last Thursday the implied probability to remain peaked at 78 percent.

Following the global debt market, the benchmark 10-year US Treasury note yield seen marching lower towards 1.50 percent mark. The 15-year JGB yield dip below zero for the first time, it is down at -0.001 percent and the benchmark 10-year JGB yield hit a fresh all-time low of -0.162 percent.

In addition, the German bunds have been closely following developments in oil markets because of their impact on inflation expectations. Today, crude oil prices fell as investors stay risk-averse ahead of a referendum that could end Britain's membership in the European Union. Apart from this, prices were also weighed by the prospect of bigger crude stocks in the U.S. The International benchmark Brent futures fell 0.79 percent to $49.95 and West Texas Intermediate (WTI) dipped 0.96 percent to $48.41 by 05:45 GMT.

Looking ahead, Bank of Japan Governor Haruhiko Kuroda will make a decision on stimulus on June 16 and the Federal Open Market Committee (FOMC) gathering scheduled for June 14-15. The U.K. decision on whether to remain in the European Union on June 23 is also weighing on investors’ minds.

Meanwhile, the German stock index DAX Index down 0.91 percent at 9,564 by 7:20 GMT.