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News : EU Economy Last Updated: Aug 26, 2015 - 2:54 AM


European government bond yields at historical lows; Dutch rate lowest in 500 years
By Michael Hennigan, Finfacts founder and editor
Jul 29, 2014 - 3:34 PM

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European government bond yields have fallen to historical lows and the Dutch 10-year rate is at the lowest in almost 500 years.

European bond yields (which move inversely in response to the market price of a bond) are falling to historical lows with the yield on Germany’s 10-year Bunds falling 2.6 basis points to 1.12 on Tuesday morning. With the exception of hyperinflation period in the early 1920s this is Germany’s lowest borrowing rate since at least 1815.

Italian yields peak for the year 2012 was at 6.6% on July 24th and the level today is 2.65% and in data going back to 1808, Italy has only been lower in the months following the end of war in Europe in 1945.

Dutch 10-year bond yields at 1.32% haven't been as lows since data begins in 1517.

Spain’s benchmark government borrowing costs fell below 2.5% Monday - -  the lowest since 1789, the year of the French Revolution while French 10-year yields dropped to 1.52% on Tuesday, the lowest point reached over a period of more than 250 years.

The Ukraine-Russian crisis and sluggish growth in Europe has increased demand for bonds and Greece is offering a hefty return of 5.86% down by 4.09% in a year.

The Irish rate today is at 2.17% and the lowest rate among developed countries is Switzerland's at 0.48% compared with US at 2.47% and the UK at 2.56%.

Borrowing costs in the UK tumbled to the lowest level for more than 300 years in January 2012 as the Eurozone crisis triggered demand for safe investments.

The yield on 10-year gilts dropped to a record low of 1.92%.

That was below the previous low of 1.96 per cent recorded in 1897 and the lowest level since Bank of England records started in 1703.

The threat of deflation in Europe is good for the bond yields.

Irish Economy: Debt sales with interest rates at lowest levels since Babylonian Empire

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