By Stefano Rebaudo
Jan 19 (Reuters) - Euro zone government bond yields edged lower on Monday as some investors moved into safe-haven assets after U.S. President Donald Trump threatened to slap extra tariffs on eight European nations until the U.S. was allowed to buy Greenland.
European Union ambassadors reached broad agreement on Sunday to intensify efforts to dissuade Trump from imposing the tariffs, while also preparing retaliatory measures should the duties go ahead.
Germany’s 10-year yields DE10YT=RR were down 2 basis points (bps) at 2.82%. They rose 1.3 bps last week.
The yield on the benchmark U.S. 10-year Treasury note US10YT=RR rose 7 bps to 4.233% on Friday, its highest since September 3, as investors assessed mixed economic data and unprecedented pressure on the Federal Reserve from the White House to lower interest rates.
The U.S. market will be closed on Monday for Martin Luther King Jr. Day.
German 2-year yields DE2YT=RR, more sensitive to expectations for monetary policy rates, fell 4 bps to 2.08%.
Italy’s 10-year government bond yields IT10YT=RR dropped 0.5 bps to 3.43%, with the gap versus German Bunds widening to 58.50 bps, after hitting 53.50 bps late Friday, its narrowest level since August 2008.
Spain’s spread versus Bund yields was at 38.50 bps after dropping to 36.9 bps on Friday, the narrowest since summer 2008. Portugal’s and Greece’s spreads were also widening from their narrowest in almost two decades.
(reporting by Stefano Rebaudo; Editing by Emelia Sithole-Matarise)
((stefano.rebaudo@tr.com))
