German bunds hold gains as investors monitor coronavirus situation
German bunds held gains during afternoon session on Thursday as traders seek refuge in safe-haven assets on fear that the coronavirus outbreak will slow the global economy.
The German 10-year bond yield, which move inversely to its price, slumped about 1 basis point to -0.423 percent, the long-term 30-year yield plunged 2 basis points to 0.084 percent and the yield on short-term 2-year remained 1 basis point down at -0.645 percent by 10:50GMT.
“We expect disruptions from the coronavirus to prompt global GDP to fall on a seasonally adjusted basis in Q1 – the first quarterly drop since the global financial crisis. But this estimate has a high degree of uncertainty in both directions, and it will take at least another couple of months for a clear picture of the short-term economic impact to emerge, noted Oxford economics.
“Business surveys are likely to fall sharply in February, but historical experience suggests they’re likely to overstate the actual loss of economic momentum. Popular Chinese tourism destinations are already being hit hard, confirming that this will be a key way the pain spreads to other Asian economies. But despite mounting anecdotal evidence of widespread supply-chain disruption, it may take until April or May to get a clear idea of its scale in the manufacturing sector at a regional and global level.”
Meanwhile, the German DAX traded - 0.12 percent down at 13,773.22 by 10:50GMT