In early trade, the yield on the country's 30-year bond fell as low as 0.5%, while the 10-year bond yield also hit a new low of just 0.097%. Germany's yield curve remained firmly in negative territory right out to January 2024. Yields fall as bond prices rise.
German government debt is considered to be some of the lowest risk globally and therefore in particularly high demand for the ECB's EUR60 billion-a-month ($64 billion) quantitative easing program.
ECB President Mario Draghi at a regular news conference on Wednesday repeated that the ECB intends to buy up to EUR1 trillion in bonds until September 2016--as announced in January--and restrict purchases to assets that yield more than the ECB's deposit rate of minus 0.2%.
"Draghi pledged to continue to metaphorically stand on the roof of the ECB building and shower euro bank notes down upon passersby," said Paul Donovan, an economist at UBS.
"The fact that, for now, the ECB means to continue with its program unaltered, is distinctly positive for all eurozone fixed-income markets and especially Germany," said Peter Chatwell, a senior rates strategist at Mizuho International in London.
The majority of bonds yielding above the ECB's deposit rate, making them eligible for purchase by the region's central bank, have seen immense support in recent weeks. This demand was reinforced by Mr. Draghi's latest remarks, and many strategists have said that as the program progresses they all likely to rise further.
Wednesday's news conference also weighed on the euro against the dollar. The latter has soared over the past few months in anticipation of the U.S. Federal Reserve preparing to raise interest rates later this year or early next, in contrast to the ECB. On Thursday the euro was broadly steady against the dollar at around $1.0675.
The Stoxx Europe 600 equity index declined by around 0.2%, having Wednesday closed a shade under its all-time high. A lower euro is generally supportive of stocks, especially exporters who depend on demand from outside the bloc.
Elsewhere Thursday, Greek markets remained in focus.
The country's Syriza-led government has been locked in negotiations with its international creditors since coming to power in late January, with progress slow. It needs a deal by this summer to secure billions of euros in bailout aid to avoid defaulting on its debts and potentially exiting the euro.
Compounding jitters, Standard & Poor's Ratings Services late Wednesday slashed its credit ratings on Greece debt deeper into junk territory, saying it expects the country's debt and financial commitments to be unsustainable without deep economic reform.
The yield on Greece's 10-year bond rose marginally early Thursday to around 11.8% while the yield on its two-year bonds climbed close to half a percentage point, closing in on 24%.
A so-called inverted curve, where shorter-dated debt yields more than longer dated, indicates that investors see a heightened chance of default.
"Overall the probability of a Greek exit remains higher now than it ever was," Barclays economists wrote in a note.
So far this year, Athens' main stock index has declined around 10%, making it one of the world's worst performing indexes.
Write to Josie Cox at josie.cox@wsj.com
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(END) Dow Jones Newswires
April 16, 2015 03:50 ET (07:50 GMT)
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