Bond yields climb, stocks dip on shifting ECB views

NEW YORK (Sept 11) - A gauge of world stock markets fell for the first time in five sessions and bond yields rose on Tuesday, as uncertainty grew over the mix of stimulus the European Central Bank will add to boost a slumping economy this week amid fresh signs global growth was slowing.

Germany’s 30-year benchmark bond yield DE30YT=RR briefly broke into positive territory for the first time since Aug. 5, while U.S. Treasury yields US2YT=RR US10YT=RR US30YT=RR climbed to three-week highs.

Benchmark U.S. 10-year notes US10YT=RR last fell 21/32 in price to yield 1.6936%, from 1.622% late on Monday.

The bond moves come as market participants look towards Thursday’s ECB meeting, which is widely expected to deliver a cut to interest rates and point to further bond-buying stimulus.

However, concern has been mounting that ECB policymakers and other global central banks are nearing the limits of stimulus policies, especially those with negative interest rates and sub-zero long-term sovereign bond yields.

“The real fulcrum event is the ECB meeting and that will drive Bunds, which in turn, have had a massive influence on Treasuries over the course of the last eight weeks or so,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.

Reuters