FRANKFURT (dpa-AFX) – German government bonds rose on Monday. By the afternoon, the trend-setting futures contract Euro-Bund-Future rose by 0.20 percent to 154.71 points. The yield on ten-year Bunds was 1.01 percent. On Friday, it fell briefly below the one percent mark for the first time since the end of May.
The bonds benefited from the decision by Russian gas group GAZPROM to further reduce natural gas supplies through the Nord Stream 1 pipeline in the Baltic Sea. Natural gas prices increased noticeably. According to the company, from July 27th, 20 percent or 33 million cubic meters of gas will flow through the most important supply pipeline to Germany every day. This would only be half of the last quantity delivered.
The European Union and especially Germany are heavily dependent on Russian gas. A complete end to gas supplies is feared on the markets, which would weigh heavily on the European economy.
The disappointingly unusual Ifo business climate initially did not have a lasting effect on the bonds. The mood in the German economy deteriorated more than expected in July. “Germany is on the threshold of recession,” commented Ifo President Clemens Fuest.
“The massive slump in the Ifo business climate primarily reflects German companies’ fears of a gas crisis,” commented Jrg Krmer, chief economist at Commerzbank. “The Ifo business climate, like the purchasing managers’ index, is now clearly pointing to a downturn in the German economy. How bad things turn out in the end is unfortunately primarily in Putin’s hands.” /jsl/he