LONDON, Sept 25 (Reuters) - Euro zone government bond yields edged down on Wednesday, as investors rushed to safe-haven assets in the wake of dismal economic data and heightened political uncertainty this week.
Democrats in the United States House of Representatives launched a formal impeachment inquiry into President Donald Trump on Tuesday, accusing him of seeking foreign help to smear Democratic rival Joe Biden ahead of next year’s election.
Trump also delivered a stinging rebuke to China’s trade practices on Tuesday at the United Nations General Assembly, saying he would not accept a “bad deal” in U.S.-China trade negotiations.
The British parliament is set to reconvene after the UK Supreme Court decided the decision to suspend it for five weeks was unlawful.
“It’s political uncertainty that is dominating, with British parliament opening today. I think they will try to paralyse Johnson with his evil hard Brexit plan. This might be taken as a sign of hope and could stabilise the market,” said Bayerische Landesbank rates strategist Norbert Wuthe.
“But on the other hand we have the impeachment (inquiry) process in the U.S., which could lead to some further safe haven movements.”
Most 10-year benchmark euro zone government bond yields were down 1 to 2 bps on the day
Political risks have added to investor worries about economic data, sending them flocking into safe-haven government bonds, with Germany’s benchmark 10-year bond yield down 9 basis points this week.
Poor purchasing managers’ index readings on Monday and a German business sentiment on Tuesday showed economic outlook expectations deteriorating in Europe.
Yields on euro zone bonds are at their lowest since Sept. 12, when the European Central Bank unleashed a fresh wave of stimulus measures including rate cuts and asset purchases to boost economic growth and inflation.
But French consumer confidence data provided a glimmer of hope, exceeding expectations with the reading at its highest level since January 2018.
In the primary market, Germany is due to auction 3 billion euros of 2029 bonds on Wednesday. (Editing by Jacqueline Wong)