LONDON Jan 12 HSBC said on Thursday it had
revised up its forecasts for German government bond yields and
no longer sees them ending the year in negative territory.
The bank said that long-term it sees upward pressure on Bund
yields given heightened inflation fears, although growing
political uncertainty and the ECB's bond-buying stimulus scheme
should limit any rise.
"We have revised our forecast for the 10-year Bund yield
higher by 65 basis points to 0.60 percent at end-Q3 before
falling to 0.35 percent year-end from minus 0.20 percent
previously," the bank said.
German government bonds are the benchmark for borrowing
costs in the euro area and often set the tone for bond trading
in the region. The 10-year Bund yield stood at 0.23 percent on
(Reporting by Dhara Ranasinghe, editing by Nigel Stephenson)