German yields hit fresh multi-week lows, euro area spreads widen

By Stefano Rebaudo

Feb 6 (Reuters) - German government bond yields fell to multi‑week lows on Friday and spreads versus other euro zone bonds widened as investors steered away from risk assets.

A global stock rout on Wall Street spilled into Asia and Europe on Friday, leaving investors dazed and many regional benchmarks in the red.

With Thursday’s European Central Bank meeting offering no reason to change the euro area rate outlook, German bonds took their cue from U.S. Treasuries while also keeping an eye on the Bank of England’s dovish surprise.

Germany’s 10-year government bond yield DE10YT=RR, the euro area’s benchmark, fell 2.5 basis points (bp) to 2.82%, after hitting 2.813% its lowest since January 19.

U.S. Treasury yields dropped, with the 10-year US10YT=RR down 2 bps at 4.19% in early London trade, after falling the day before as two economic releases pointed to a weaker than expected jobs market ahead of next week's highly anticipated payrolls report for January.

German 2-year yields DE2YT=RR fell 2.5 bps to 2.047%, its lowest since December 3.

Italy’s 10-year government bond yield IT10YT=RR was down one bp to 3.46%. The gap versus Bunds widened to 63 bps. It reached 53.50 in mid-January, its lowest level since August 2008.

French spread DE10FR10=RR rose to 62 bps, its highest since January 23. It hit 55.15 on January 28, its lowest since June 2024.

Analysts and investors argued that spreads had run their course in terms of tightening, barring progress on European financial integration.