German Yields Fall to a Record as Markets Set the Tone for ECB

(Bloomberg) -- German yields are once again plumbing fresh depths ahead of a crucial European Central Bank meeting that will set the course for global easing.

Yields on 30-year bonds fell to a record low as money markets priced in a 40% chance of a rate cut at today’s decision. Analysts expect President Mario Draghi to set the stage for lower borrowing costs and more quantitative easing in September to combat an economic slowdown and sagging inflation.

“The ECB can hardly afford to disappoint,” wrote Commerzbank AG strategists led by Michael Leister. “We expect Draghi to surprise markets once more and to deliver 20 basis points of rate cuts” at this meeting.

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German 30-year yields dropped three basis points to 0.18%, the lowest level ever, while those on 10-year securities fell two basis points to equal the ECB’s deposit rate of -0.40%.

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