European government bonds traded near multi-week lows on Friday after the sell-off in technology stocks.
Yields on eurozone government bonds held near multi-week lows on Friday. Investors continued to seek protection from volatility in equity and credit markets.
The yield on 10-year German bonds stood at 3,404 percent. The indicator remained close to the low of more than a month, recorded in the previous session. The yield on two-year securities fell to 3,059 percent. This was the third consecutive daily decline.
The steady decline in yields across securities of different maturities indicates a structural shift towards sovereign duration. Portfolio managers are using this instrument for hedging after months of simultaneous declines in stocks and bonds.
The reason was the global sell-off in shares of the largest technology companies and the artificial intelligence sector. Market participants doubt the timing of returns on AI investments and the growth of debt burden. Overcrowding in the corporate debt market and widening CDS spreads also pushed institutional investors towards liquid risk-free sovereign assets.
Despite disruptions in raw material supplies and high energy prices, which complicate the ECB's inflation forecast, fixed income divisions prioritize protection through duration. Spreads on bonds of peripheral countries remain under observation after Christine Lagarde's statement on the need to reduce France's budget deficit. Benchmark yields are declining from 2002 highs, which eases pressure on growth across the entire curve in Europe.