Euro zone bond yields tick up; EU launches third bond sale for SURE

Yoruk Bahceli
·2 min read

* Bond yields tick up

* EU expected to launch 15-year to fund SURE

* Ifo survey, ECB speakers in focus

By Yoruk Bahceli

AMSTERDAM, Nov 24 (Reuters) - Euro zone bond yields edged up in early trade on Tuesday as riskier assets gained after U.S. President Donald Trump gave the green light for a transition to a new administration and as France looked likely to ease lockdown restrictions.

After disputing Democratic president-elect Joe Biden's election win for weeks, Trump said on Monday he head given the General Services Administration the go-ahead to proceed with a transition for Biden's administration despite plans to continue with legal challenges.

France reported on Monday its lowest coronavirus tally since September and investors were focused on a speech by President Emmanuel Macron later on Tuesday when he may announce an easing of lockdown rules.

That boosted riskier assets like stocks and trade-sensitive currencies, while euro zone bonds were hurt marginally. Germany's 10-year benchmark yield was up 1 basis point to -0.57% in early trade.

Christian Lenk, a strategist at DZ Bank, said Trump's decision to allow a transition of power might not have come as a big surprise for markets, while he noted that bond markets have been in a "wait and see mode" since recovering from a sell-off on optimism around Pfizer's vaccine efficacy earlier in November.

Elsewhere, the European Union started the sale of a new 15-year bond under its funding programme for the SURE unemployment scheme on Tuesday, after hiring a syndicate of banks on Monday.

Commerzbank analysts expect it will raise 8 billion to 10 billion euros ($9.50 billion-$11.88 billion) from the bond.

It will be the EU's third bond sale to fund the SURE unemployment scheme of up to 100 billion euros. The bloc has already raised 31 billion euros of funding, issuing 10- and 20-year bonds in October and 5- and 30-year bonds earlier in November.

Some focus was also on the ECB's weekly purchase data, which showed its overall bond buying at its highest level since July.

The bank is largely expected to expand stimulus at its December meeting, after pre-committing in recent weeks, so its purchases have been eyed as confirmation of its willingness to support markets.

A number of ECB board members are due to speak later on Tuesday, with President Christine Lagarde scheduled for 1400 GMT.

Investors will also eye the Ifo business climate surveys out of Germany due at 0900 GMT, which are expected to show a deterioration in sentiment.

($1 = 0.8420 euros) (Reporting by Yoruk Bahceli; Editing by Susan Fenton)