BOND REPORT: European Bonds Sell Off As Draghi's Words Keep Weighing

By Christopher Whittall Features Dow Jones Newswires

Rises in euro, eurozone government bond yields continue for a second day after Draghi comments

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Investors dumped eurozone government bonds on Wednesday, marking a second day of heavy selling for debt in the region after European Central Bank President Mario Draghi hinted at unwinding the bank's EUR2.3 trillion ($2.6 trillion) bond-buying program.

The euro also continued its ascent against the dollar after notching its largest one-day gain in a year on Tuesday. It was up 0.4% at $1.1387 on Wednesday morning.

The yield on Germany's 10-year government bond rose to 0.391%, according to Tradeweb, its highest level in about a month and up from around 0.25% on Monday's close. Yields rise as prices fall. Government and corporate bonds across the eurozone were also weaker.

The selloff in eurozone debt has also dragged Treasury yields higher over the past two sessions (http://www.marketwatch.com/story/treasury-yields-rise-after-draghi-dismisses-factors-holding-down-inflation-as-temporary-2017-06-27). The yield on the 10-year note was at 2.232% recently, compared with 2.135% at Monday's close.

The ECB's colossal buying program has pinned down bond yields in the eurozone in recent years, helping to lower financing costs for governments and companies in the region.

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The jerk higher in yields following Draghi's comments (http://www.marketwatch.com/story/ecbs-draghi-hints-at-winding-down-of-eurozone-qe-2017-06-27) is reminiscent of other so-called taper tantrums, when investors have sought to pre-empt central banks scaling back their stimulus measures.

In 2013, the yield on the 10-year Treasury note rose sharply after the Federal Reserve raised the prospect of slowing its bond purchases. The move caused ripples across the globe, hurting emerging-market investments in particular, where investors had poured money in search of higher returns.

(END) Dow Jones Newswires

June 28, 2017 05:51 ET (09:51 GMT)