Trump threat sees German 30-year yields fall below 0% for first time

Edmund Heaphy
Finance and news reporter
US president Donald Trump speaking at a campaign rally on Thursday. Photo: AP Photo/John Minchillo

Yields on German 30-year bonds fell below 0% for the first time ever on Friday after US president Donald Trump’s threat to introduce new tariffs on Chinese goods roiled global markets.

German 10-year government bond yields also fell to a new all-time low on Friday as investors sold off equities and moved to safe-haven assets.

At 12pm UK time, the 30-year bond yield was hovering around 0.00, down from a close of 0.10 on Thursday and slightly up from the low it hit within the previous hour.

The 10-year bond yield was hovering around -0.50, meaning that the entire spread of German bonds were in negative territory for the first time ever.

READ MORE: Oil recovers slightly after Trump trade threat prompts huge plunge

Because government bonds — known as “gilts” in the UK and “treasuries” in the US — are guaranteed by governments, they are seen as having a much lower risk than investments in stocks and other commodities.

Government bonds from other core euro zone countries, such as Italy, were also lower on Friday.

US 10-year treasuries, meanwhile, fell 13 basis points on Thursday, to just 1.876% .

Oil prices fell by the most in over three years on the same day after Trump said that his administration would launch a 10% tariff on an additional $300bn of Chinese goods on 1 September.

Brent crude futures (BZ=F) rose by nearly 2.8% on Friday after plunging by almost 8% on Friday, the largest decline since February 2016.

The Chinese government on Friday said that it would retaliate with similar tariffs, demonstrating the extent to which Trump had escalated the trade war between the two countries, which began in early 2018.