Overnight Fixed Income Wrap: 10-Year Bund Yields Up 3.3 bps at 0.492%

Ten-year Bund yields rose 3.3 basis points to 0.492% in opening trade, with the 0.5% mark coming into sight as a hawkish turn at the European Central Bank continued to put pressure on global bond markets. Ten-year Treasury yields were up 0.6 bp at 2.977%, while 10-year Japanese government bonds eased 0.1 bp to 0.038%.

ECB chief economist Peter Praet confirmed on Wednesday that the central bank Governing Council would discuss the phasing out of the quantitative easing program at next week’s policy meeting.

Stock markets, meanwhile, improved across Asia and European stock futures were moving higher in tandem with US futures, as investors shrugged off an unexpected slump in German manufacturing orders, taking solace in the fact that central banks remained sufficiently optimistic about the economic outlook to prepare to take out more stimulus.

In addition to German manufacturing orders, Thursday’s calendar includes detailed Eurozone Q1 GDP as well as UK house price data from the Halifax.

Earlier Fixed Income Movement:

1:51 am ET:

Stock markets continued to move higher during the Asian session on improving confidence in the world economy and despite the prospect of tensions at the G7 meeting over the future of trade relationships and US sanctions.

Ten-year Treasury yields were little changed at 2.968%, while 10-year JGBs edged up 0.4 bp to 0.043% amid a broad move higher in yields across Asia.

Among major Asian stock exchanges, Japan’s Nikkei 225 and Topix gained 0.87% and 0.64%, respectively, while the Hong Kong Hang Seng rose 0.61% and Australia’s ASX gained 0.53%.

Mainland China bourses, meanwhile, erased early gains and were in the red, with concerns about Sino-American trade relations continuing to weigh on sentiment. The Shanghai Composite slipped by 0.18%.

US futures rose, suggesting that overall mood in equity markets was improving. Oil prices remained below $65 per barrel, with July Nymex futures trading at $64.97.

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