January 5, 2017 / 7:22 AM / 3 years ago

Euro zone govt bond yields fall on U.S. policy uncertainty

LONDON, Jan 5 (Reuters) - Euro zone government bond yields fell broadly on Thursday, mirroring a move in U.S. Treasuries, after minutes of the last U.S. Federal Reserve meeting struck a more uncertain tone than the market had expected.

German 10-year bond yields — the euro zone benchmark — fell 2 basis points (bps) to 0.26 percent, while most other euro zone equivalents were down 2-3 bps.

The minutes of the Dec. 13-14 meeting showed many policymakers were considering faster interest rate increases as the economy could grow at a quicker pace because of fiscal stimulus under President-elect Donald Trump’s administration.

But they also spelled out downside risks that could limit economic growth, such as trade barriers, the dollar’s appreciation and uncertainty on fiscal measures.

“‘Wait and see’ remains the best way to describe the Fed’s attitude but the minutes show it is getting concerned that a hotter economy may warrant a less gradual hiking path,” Mizuho’s head of euro rates strategy Peter Chatwell said. (Reporting by John Geddie; Editing by Alistair Smout)

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