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German Bonds Rise as Central Bank to Halt Interest on State Cash
Short-term German bonds rallied after the nation’s central bank said it would stop paying interest on domestic government deposits, a move that could spur billions of euros of flows into higher-yielding securities The rate on two-year notes fell as much as six basis points to 2.95% after the Bundesbank said late Friday it will remunerate domestic government deposits at 0% starting Oct. 1. That compares to the current European Central Bank cap of 20 basis points below the euro short-term rate, which puts it around 3.45%. While officials had signaled they would eventually cap the rate, the decision still caught the ... (full story)