LONDON, July 1 (Reuters) - German and French 10-year bond yields fell to fresh record lows on Monday after comments from a hawkish member of the European Central Bank boosted expectations for monetary easing soon.
Dutch central bank chief Klaas Knot said that while the euro zone was not in recessionary territory, expectations for the second and third quarter were less favourable than the first quarter and that the ECB was determined to act in adverse scenarios.
France’s 10-year bond yield fell deeper into sub-zero territory to a record low of -0.034% and Germany’s 10-year bond yield hit a fresh record low of -0.35%, just five basis points away from the ECB’s deposit rate.
“Since he (Knot) is a hawk, the comments suggest the governing council is coming around to the need for more stimulus, so the market is reacting to that,” said DZ Bank rates analyst Rene Albrecht. (Reporting by Dhara Ranasinghe, Editing by Abhinav Ramnarayan)