LONDON, April 19 Yields on shorter-dated German
government bonds rose to 1-1/2 week highs on Wednesday, with one
analyst citing a release by the ECB on market financing
conditions for the move.
In a survey of banks released on Wednesday, the European
Central Bank said the liquidity and functioning of markets for
the underlying collateral, especially in government bonds, has
The scarcity of high-quality short-term debt, which is used
as collateral in funding markets, has helped drive short-dated
bond yields lower.
Commerzbank strategist David Schnautz said the bank survey
could encourage the ECB to take action to address a shortage of
bonds for use as collateral.
"So far the ECB's mantra has been that markets are
functioning normally, so it seems to be softening its stance by
acknowledging the knock-on effects of QE to the proper
functioning of the market," Schnautz said.
Germany's 2-year government bond yield rose 4 basis points
to a 1-1/2 week high of minus 0.81 percent.
Five-year German bond yields also rose to a 1-1/2 week high
of minus 0.48 percent.
(Reporting by Abhinav Ramnarayan; Writing by Dhara Ranasinghe;
Editing by Nigel Stephenson)