European Bond Markets: European long-term government bonds rise on risk aversion
Long-term European government bonds rose amid rising risk aversion in global markets. Germany's 30-year bond yield fell 3 basis points to 3.62%, while the two-year bond yield rose 1 basis point to 2.78%. The outperformance of long-dated bonds has led to a steepening of the German yield curve. Despite Friday's slide, long-term bond yields rose for a third straight week, marking their longest winning streak since the Middle East war began While few in the market expect next week's European Central Bank policy meeting to result in a rate hike, traders are betting on a 94% chance of a hike in September, and another high likelihood of another rate hike before the end of the year. The rise in British government bonds was also supported by market expectations for a smooth handover of the prime ministership. Andy Burnham becomes Labor leader on Friday. Ahead of Mahmoud's possible appointment as finance minister, his fiscal and spending plans are being closely watched. German bond yields fell 2 basis points to 3.12%. Bund futures rose 20 points to 125.05. Italy's 10-year government bond yield changed little at 3.94%. The Italian-German bond yield spread widened 2 basis points to 83 basis points. The French 10-year government bond yield changed little at 3.92%. The 10-year UK government bond yield fell 2 basis points to 4.95%.