European bond market prepares for French referendum

In the UK on Friday, yields on 2-year gilts were down 1.1 basis points to a yeild of 4.352 percent. Yields on longer-dated issues, however, were higher.

The new 50-year gilt had a yield of 4.259 percent, up 2.8 basis points, the 30-year gilt advanced 3 basis points to 4.326 percent, and the 10-year gilt rose 3.6 basis points to yield 4.388.

In the eurozone, meanwhile yields were down on government bonds amid more negative news on the economy and looking forward to a probably “no” vote in the referendum on the European Union constitution in France on Sunday.

In France, business confidence was reported down, while in Germany a report said that consumer sentiment is expected to fall in June. Anticipation of the French vote led investors to buy what they saw as less-risky German Bunds and selling Italian and Greek government bonds.

It is expected that either more “no” votes than anticipated or a surprise “yes” vote in France on Sunday will have a major impact on European bond markets.

In afternoon trading in London, the 10-year Bund yielded 3.322 percent and the 2-year Schatz stood at a yield of 2.172 percent.

Story link: European bond market prepares for French referendum