February 5, 2018 / 9:12 AM / in 19 days

Share of euro zone bonds with sub-zero yields lowest since at least mid-2016

LONDON, Feb 5 (Reuters) - The share of euro zone government bonds with negative yields on Tradeweb fell to around 36 percent in January, its lowest level since at least mid-2016, according to data from the fixed income trading platform.

Of around the 7 trillion euros of euro zone bonds traded on Tradeweb, about 2.6 trillion euros or 36 percent, yielded less than zero in January.

That is down from almost 42 percent in December and the lowest share since at least June 2016, when Tradeweb started to publish monthly data on the share of negative-yield bonds on its system.

Tradeweb’s data shows roughly 19 percent of euro zone government bonds yield less than the ECB’s deposit rate of minus 0.4 percent, also the lowest share since the data collection began in 2016.

The pool of sub-zero yielding bonds in the bloc has started to shrink as strong economic data and a pick up in inflation expectations fuel an expectation that the European Central Bank could pull back from its ultra-easy monetary policy sooner than anticipated.

German 5-year bond yields last week pushed into positive territory for the first since 2015, while long-dated German bond yields on Monday hit their highest level in around two years . (Reporting by Dhara Ranasinghe; editing by Sujata Rao and Jamie McGeever)

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