Tillerson ouster gives boost to eurozone bonds

LONDON, March 13, (RTRS): Eurozone government bond yields fell on Tuesday following news that US President Donald Trump has ousted US Secretary of State Rex Tillerson, injecting a fresh dose of volatility into world markets.

Data showing that US inflation slowed in February also reassured investors, putting downward pressure on bond yields on both sides of the Atlantic.

“Treasuries reversed direction on the fear that Tillerson’s removal will give the nationalists greater power within the White House over the globalists,” said Investec economist Philip Shaw.

Trump said he had replaced Tillerson with Central Intelligence Agency Director Mike Pompeo, and had tapped Gina Haspel to lead the CIA.

The US 10-year Treasury yield fell as much as 3 basis points on the Tillerson news and was last trading at around 2.85 percent, also held down by news of slowing inflation.

In Europe, bond yields fell 1-3 basis across the board.

Germany’s 10-year government bond yield fell 2 bps to around 0.61 percent, its lowest level in just over a week.

Europe’s STOXX 600 fell to a session low on the news and were last down 0.2 percent. The pan-European banks index also tumbled to the day’s low, down 0.2 percent.

The dollar, meanwhile, extended its fall. It had already been weak across other G10 currencies after US inflation data came in as per forecasts but it skidded further as the sell-off accelerated.