Two-year German government bonds rose for fourth consecutive day, as yields fell to a record low. The investors seek the safest assets in the region because of growing concerns about the outcome of the presidential elections in France. Thus, the spread between yields on German bonds and the US securities with the same maturity touched its highest value in nearly 17 years.
The recent polls show that the leader of the far-right National Front, Marine Le Pen increased his popularity.
If there is some stabilization of political news, the yields will stabilize at current levels and will not reach -1%, according to the analysts.
Yields on two-year German bonds fell by 5 basis points to a record low of -0.915%. This expanded spread from the US 2-year securities to 213 basis points, which is the highest value since March 2000.
Still onerous monetary policy of the European Central Bank (ECB) belie the intentions of the Fed to raise interest rates three times this year. This divergence is also expected to lead to a wider spread between German and US government bonds.