German bonds look set to face a more volatile end to the year after seeing the narrowest quarterly trading range ever.
An increasing shortage of bunds amid slowing government debt sales and continued purchases by the European Central Bank could push benchmark yields below recent ranges in the fourth quarter, according to Citigroup Inc. Strategists at the bank see the German 10-year yield falling to minus 0.6%, compared with the third-quarter average of minus 0.47%.
Uncertainty over the November U.S. election and a resurgence of the coronavirus should spur haven buying of bunds, adding downward pressure on yields, according to Citi.
Strategists Jamie Searle and Aman Bansal estimate monthly debt issuance this quarter by the German finance agency will average 10 billion euros ($12 billion), about 60% less versus the April-September period. That, coupled with