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European Rates Converge In Wake Of QE

The QE programme's €60bn per month purchasing plan, intended to stoke inflation and economic activity in the eurozone, had an immediate impact as borrowing costs fell across the region. German ten year yields shed around 5bps to end the day at 0.32%, near all time lows. The ECB will be buying bonds with maturities from two to 30 years.

Investors have long been anticipating the price effect QE would have on European government debt as evident by the general tightening seen in European sovereign bonds since rumours of the program first started in November of last year. The near end of the German government yield curve has since moved into negative territory. While the shift has been across the maturities, longer dated bonds have seen their yields fall by a greater margin then their shorted dated peers, causing the yield curve to flatten. The yield gap between two and 30 year bonds has fallen from 1.58% at the start of December last year to 1.07% today. Read more