Tradeweb Government Bond Update – September 2020

August’s government debt sell-off proved to be short-lived. Amid a flurry of central bank and economic news, 10-year government bond yields fell in September, with some pushed further into negative territory.

Italy’s 10-year bond mid-yield saw the largest decline, plunging 26 basis points to finish the month at 0.82%. Yields on Portugal and Spain’s benchmark notes also posted significant drops, decreasing by 15 basis points to 0.26% and 0.25%, respectively. While Portuguese Finance Minister Joao Leao said the economy was recovering better than expected, the European Commission still predicts a GDP contraction of 9.8% this year. Similarly, Spain’s GDP is expected to contract by 10.9% this year, however, the country’s Economy Minister Nadia Calvino forecasted an expansion of more than 10% in the third quarter.

Meanwhile, the German 10-year Bund yield fell by nearly 12.5 basis points to close at -0.53%. Data from Germany’s Federal Statistical Office showed that consumer

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