| LONDON, Sept 7
LONDON, Sept 7 Most euro zone bond yields fell
on Wednesday on expectations that poor data from the United
States will have put pressure on the European Central Bank to
announce further easing measures.
The ECB meets on rates Thursday. On Tuesday, data showed
that the U.S. service sector expanded more slowly in August than
in July, with the fall the largest since the 2008 financial
This, on the back of Friday's weak jobs numbers, pushed back
expectations for a U.S. rate hike.
"With a September rate hike looking less likely to happen,
the ECB might be more pressured to come up with a decision this
week on further measures," said Benjamin Schroeder, senior rates
strategist at ING.
The ECB is expected to leave rates unchanged when its
governing council meets but could use the opportunity to extend
its bond-buying scheme and tweak the parameters to ease scarcity
High grade euro zone bond yields fell as a result, led by
France, which saw its 10-year bond yield fall 1.1
basis points to 0.10 percent.
Even the yield on the 10-year German Bund
edged lower to minus 0.12 percent despite the fact that the
German debt management office is due to sell 5 billion euros of
10-year bonds today via an auction.
Yields tend to rise ahead of a planned sale as investors
sell outstanding bonds to free up cash to buy the new bonds,
which are often offered at a premium to the market rate.
Spanish bonds bucked the trend on the day, rising slightly
to 0.95 percent and coming off the lows hit on Tuesday, when the
10-year bond recorded its biggest daily fall since
the start of July.
That fall came despite the fact that Spain faces a prolonged
political deadlock and potentially a third national election in
less than a year, after Acting Prime Minister Mariano Rajoy last
week failed to win parliamentary approval for the formation of a
"You had a spike in yields in the run up to last week's
vote, and I think with the ECB expected to announce measures
this week, Spain is just one of the better yielding bonds in the
euro zone," Schroeder said.
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(Reporting by Abhinav Ramnarayan)