Germany’s bond auction on Wednesday drew lower demand due to record low yields, especially on the 10-year Bund. Investors felt that despite the safety factor of the bunds, they would not make much of a return holding such bonds with low yields.
Germany auctioned 5 billion euros of the new 1.75 percent of the new 10-year bond issue, due July 2022, but only sold 3.87 billion euros worth. Technically this means the auction was uncovered.
The average yield came in at 1.77 percent, the lowest ever at a German 10-year auction. At the previous 10-year bund sale in February for the January 2022 bund, the average yield was slightly higher 1.83 percent.
However Germany’s debt agency said on Wednesday the result of the sale of its new 10-year Bund was good given the context of slightly increasing market uncertainty and it had retained what it intended to.
Meanwhile bond yields in Italy and Spain eased. This helped buoy the euro today and kept it supported against the dollar, hitting as high as 1.3141 during European session trading.