* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr
AMSTERDAM, Sept 25 (Reuters) - Safe-haven German bond yields
ticked up in early Friday trade as stimulus hopes in the United
States supported global markets.
Democrats in the U.S. House of Representatives are working
on a $2.2 trillion coronavirus stimulus package that could be
voted on next week, and House Speaker Nancy Pelosi reiterated
she is ready to negotiate on it with the White House. That news
helped assuage fears this week that recovery from the pandemic
could be running out of steam, which shook markets.
"We see core bond markets mainly exposed to (at times
erratic) swings in the equity complex and (at times
contradictory) news regarding a potential US stimulus package,"
UniCredit analysts told clients.
"U.S. Treasury and Bund markets are likely to continue their
seesawing pattern of the past two weeks or so for another few
Germany's 10-year yield was up 1 basis point to -0.50% in
early trade. They are set to end the week lower as
the growing number of coronavirus cases in Europe support demand
for safe-haven bonds.
More European Central Bank speakers were out on Friday, with
Governing Council member Francois Villeroy de Galhau saying the
ECB should examine whether the current formulation of its
inflation target casts doubt on the ECB's commitment to
"We would argue that further central bank speak will have a
harder job moving markets going forward," ING analysts said,
noting that many ECB speakers have already left the door open
for further easing.
Investors are pricing about a 90% chance of a full ECB rate
cut in July 2021, compared with a full probability earlier in
Money markets are in focus after the latest allotment of the
European Central Bank's ultra-cheap TLTRO loans. Analysts expect
they will push excess liquidity - commercial bank deposits held
at the ECB after accounting for minimum reserve requirements -
above 3 trillion euros.
Money market rates have sunk to record lows; the amount of
excess liquidity leaves little reason for banks to borrow from
one another. While Euribor interbank rates have come off record
lows in recent sessions, analysts expect they will fall back.
"The challenge for most bank treasurers should be too much,
not too little liquidity, prompting more defensive or no bids at
all for deposits," Christoph Rieger, head of rates and credit
research at Commerzbank, told clients.
(Reporting by Yoruk Bahceli, editing by Larry King)