The euro area’s higher-yielding government bonds are emerging as a haven from emerging-market turmoil as the prospect of greater stimulus from the European Central Bank underpins demand for the securities.
Italy’s government bonds rose, pushing 10-year yields to a record low, amid speculation demand from local investors at a sale of inflation-linked debt will be reinforced by overseas funds as the economy improves.
U.K. government bonds snapped a two-day gain after a report showed house prices had their biggest annual increase in 3 1/2 years, adding to speculation the Bank of England will hasten plans to lift interest rates.
German government bonds advanced, pushing 10-year yields below 1.50 percent for the first time since June, as stocks slumped after JPMorgan Chase & Co. said first-quarter profit declined more than forecast.
Investors such as BlackRock Inc. and Wasmer Schroeder & Co. are growing wary of New Jersey debt, saying the state’s credit rating is poised to fall further without steps to address revenue and pension gaps.
Europe’s worsening growth prospects are losing significance for bond investors as bets the European Central Bank will begin asset-purchase stimulus measures support demand for the region’s higher-yielding bonds.
Italian government bonds fell, pushing 10-year yields up from a record low, as investors monitored speeches by European Central Bank policy makers for signs of whether they will introduce new stimulus.