Bond selloff drags stocks lower

European bond prices plummeted on Thursday June 4th, as traders scrambled to rid themselves of sovereign debt. Subsequently, yield prices spiked higher and pressured stocks lower.

The yield on the German 10-year Bund soared to flirt with the 1.00 per cent barrier, the highest level seen since September last year. 

Experts note that developments in the Greek debt crisis are hotting up and we can expect markets to be volatile on further news. 

“The Greek PM, for now, is holding firm to the idea that any deal must be based on a proposal coming from, not going to, Greece, with a counter offer from the country expected to land at creditors’ feet at some point before the end of the week,” said Connor Campbell, financial analyst at Spread EX.

“Eurozone indices are continuing their rollercoaster ride this week, slipping to losses after seeing hope-filled gains yesterday afternoon.”

Stock markets in the European Union and the UK were racking up significant losses in Thursday’s morning session, with all major European indices down more than one per cent.

Germany’s DAX shed over 1.5 per cent, the French CAC 40 lost more than 1.9 per cent and the Euro Stoxx 50 index was around 1.6 per cent lower. Meanwhile, the FTSE-100 declined by 1.4 per cent. 

The euro gained a boost on the bond rout and helped to weigh on the already pressured stock markets. EUR/USD surged to a five-month high and took the euro’s gains over the last two days past the three per cent mark. 

After a meeting last night, the Financial Times confirmed that a new meeting will take place between Greece and its European creditors tomorrow, Friday June 5th, with the hopes that a deal can be reached and Athens can repay the International Monetary Fund (IMF). 

Last night, Greek prime minister Alexis Tsipras told reporters in Brussels that tomorrow’s €305m payment due to the IMF was not a worry, adding that Greece had handled bigger payments in the past.