The war in Ukraine leads German debt to trade negative again

Madrid, March 1 (.).- The uncertainty generated by the military invasion of Ukraine and the economic sanctions that Western countries have imposed on Russia have sunk the profitability of German debt, which this Tuesday returns to trading at negative rates.

At 1:30 p.m., the interest on the ten-year German bond, considered the safest and the reference in Europe, falls 14 basis points, to -0.010%, according to Bloomberg data collected by Efe.

After more than two years in negative, on January 19 Germany’s debt traded at positive rates during the session, although it finally closed at -0.14%, amid the general rise in public debt yields before the change in monetary policy.

From last January 31 to today the “bund” has registered positive rates.

The collapse of profitability this Tuesday also occurs in other countries of the eurozone. The ten-year debt of the Netherlands and France lost one and a half tenths and fell to 0.220% and 0.446%, respectively.

In the Mediterranean countries the trend is reproduced with even larger falls. The Spanish bond loses 16 basic points, up to 0.947%; Italian, 17 basic points (1,530%); and the Greek, 15 basis points (2.340%)

Eurozone and US sovereign debt yields began to rise at the start of the year on expectations of interest rate hikes by central banks to combat inflation.

However, the war in Ukraine has made public debt look like an asset with little risk, which has multiplied its demand among investors and has put downward pressure on its profitability.

In addition, some analysts point out that the sanctions against Russia and the conflict itself may imply a halt in economic growth, which could lead central banks to rethink rate hikes.