By Olga Cotaga
LONDON, Nov 23 (Reuters) – Euro zone government bonds were little changed despite positive news on a AstraZeneca AZN.L vaccine, as investors focused on the major economies under strict lockdowns and fact COVID-19 cases are not receding.
AstraZeneca said on Monday its vaccine for the coronavirus, developed along with the University of Oxford, showed an average efficiency of 70%, making it the last of the three big pharmaceutical players to report late-stage results.
But more than 58.32 million people are reported to be infected by the coronavirus globally and 1,385,595 have died, according to a Reuters tally.
“The covid pandemic, and associated social distancing measures, remains front and centre on investors’ minds,” said ING analysts in a note to clients. “This, combined with still cautious central banks, would reduce euro zone rates upside.” they said.
Benchmark German 10-year Bund yields were last flat at -0.592% DE10YT=RR, a two-week low. Peripheral yields were also flat, with Italian yields 0.59% IT10YT=RR, close to the 0.57% record low it fell to recently.
The euro zone flash Markit Composite Purchasing Managers’ Index for November was due at 0900 GMT. Economists polled by Reuters forecast that the index would fall to 45.8 from 50 the month before.
However, French and German composite PMIs, released earlier, came in higher than analysts expected, suggesting a less gloomier picture.
The spread between German and Italian government bond yields DE10IT10=RR — essentially the premium Italy is paying for its debt — stood at 117 basis points, close to a two-and-a-half year low.
ING analysts see the spread between euro zone and U.S. government bond yields shrinking, too, given that “the current wave is at an earlier stage in the U.S. and so we expect pessimism to be the dominant tone in U.S. markets,” they said.
The spread stood at -143 basis points US10DE10=RR, near the half-year low touched earlier this month.
(Reporting by Olga Cotaga, editng by Larry King)
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