LONDON, March 19 (Reuters) - German two-year bond yields turned negative for the first time since early January on Tuesday, with investors unnerved by the possibility that the Cypriot parliament may reject the terms of a proposed bailout deal.
A “no” vote in parliament over the package that contains a controversial levy on bank deposits would raise the risk of Cyprus defaulting on its debt in the near term.
German two-year yields were last 2.3 basis points lower on the day at minus 0.001 percent, while Bund futures rose as high as 144.71, up 77 ticks on the day.
“Markets are waking up to the fact that this is all quite serious. It’s going through in the futures market -- a classic risk-off’ panic scenario,” one trader said.