German 30-year bonds erased declines after the comments, with yields steady at -0.15% after having risen three basis points earlier in the day. Those on 10-year securities also steadied at -0.69%, near a record low touched earlier this month.
One of the triggers for a German bond selloff in 2015, after benchmark yields first neared 0%, was a poor 10-year auction that highlighted a loss of demand at low yield levels.
This time around, Commerzbank AG had expected demand to come from life insurers and macro investors, despite the yield curve flattening in recent weeks to drive down long-dated yields. German 30-year bonds are still attractive for U.S. investors, when hedged for currency swings, offering around a 2.6% yield, relative to around 2% on a 30-year Treasury.
“It is technically a failed auction,” said Jens Peter Sorensen, chief analyst at Danske Bank AS. “I am not all worried about this -- as investors can always just buy in the future and do not need to participate in auctions.”
--With assistance from James Hirai, Charlotte Ryan and Brian Parkin.
This article was provided by Bloomberg News.