* Eurozone suburban government bond yields tmsnrt.rs/2ii2Bqr
LONDON, March 24 (Reuters) – German 10-year bond yields fell to a five-week low on Wednesday, a sign of growing discomfort over the eurozone’s economic outlook amid tighter restrictions to contain the new wave of COVID-19.
Across the single currency bloc, the 10-year bond yields fell by 2-3 basis points as investors returned to the safe-haven bond market.
France has reintroduced lockdowns and Germany has extended lockdowns to April 18. Signs of an increase in the European Central Bank’s rate of bond buying may also help explain the move lower in bond yields this week.
“While Bund yields may struggle to break below the current range, refocusing on the domestic pandemic front against the backdrop of increasing ECB buying – even if only slightly – could contribute to keeping yields lower for now,” said Benjamin Schroeder, senior interest rate strategist. on ING.
The yield on the German 10-year Bund fell to -0.375%, the lowest level in five weeks. That’s down about 7 bps this whole week.
Germany will auction off 4 billion euros of 10-year bonds at a later date.
Focus in the meantime shifted to the release of the flash purchasing managers’ index in the euro area countries.
France’s Flash Composite PMI rose to 49.5 in March from a final reading of 47 in February, data showed.
While the PMI data is considered a forward-looking economic indicator, the latest release may have a muted market impact, given the new spike in coronavirus cases and tighter restrictions likely to weigh on economic activity going forward, analysts said. (Reporting by Dhara Ranasinghe Editing by Gareth Jones)