Government Bond Yields Rise After ECB Meeting

Government bond yields in the U.S. and Europe rose Thursday after European Central Bank President Mario Draghi downplayed the risk of recession in the eurozone. The yield on the benchmark 10-year U.S. Treasury note settled at 2.078%, compared with 2.052% Wednesday.

Yields, which rise when bond prices fall, initially declined after the ECB said in a statement that it was holding interest rates unchanged but strongly signaled that it would adopt new stimulus measures, including interest-rate cuts, at its next meeting in September.

Yields, though, quickly reversed course when Mr. Draghi, in a press conference, said ECB officials hadn’t discussed the scale of possible rate cuts or asset purchases. He also said the risk of a recession in the eurozone was “pretty low” despite a worsening economic outlook.

In Europe, the yield on the 10-year German bund rose to negative 0.407% from negative 0.424% Wednesday, according to Tradeweb, while the yield on Italy’s 10-year bond climbed to 1.519% from 1.498%.

The euro was also recently up less than 0.1% against the dollar at $1.1144.

ECB officials have “shown the market what they could do but haven’t yet come up with the details of what they would actually do,” said Brian Daingerfield, head of G-10 FX strategy for Americas at NatWest Markets.

Despite the uptick on Thursday, yields on European government bonds are still down significantly from last fall, when the 10-year German bund yield was above 0%.

Slowing global growth and expectations for rate cuts from both the ECB and U.S. Federal Reserve have helped drive demand for government debt in recent months, even as riskier assets like stocks and corporate bonds have also performed well.

The dollar, meanwhile, has held to a tight range, as the Fed’s turn toward a looser monetary policy—which might normally have pushed the currency lower—has been mirrored by similar moves from other central banks.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.2% at 90.65.

Write to Sam Goldfarb at

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