Ahead of the European Central Bank announcement on Thursday, German bond exchange traded notes are strengthening on speculation of additional quantitative easing to combat a persistently weak Eurozone economy.
On Wednesday, the PowerShares DB German Bond Futures ETN (NYSE Arca: BUNL) was up 0.11% and the leveraged PowerShares DB 3x German Bond Futures ETN (NYSE Arca: BUNT) was 1.6% higher. Year-to-date, BUNL has gained 11.0% while BUNT increased 35.5%.
Both ETNs are relatively small – BUNL has $9.2 million in assets and BUNT has $15.3 million in assets. Consequently, potential investors should utilize limit-orders to better execute trades. [A German Bond ETN Rally]
The ETNs track long positions in Euro-Bund futures with remaining term to maturity of no less than 8 years and 6 months and no more than 10 years and 6 months.
In response to the loose monetary bets, Germany auctioned 10-year bonds with a yield less than 1% for the first time, Bloomberg reports.
In the secondary market, benchmark 10-year German bund yields were at 0.9% Wednesday. The rate touched a record-low of 0.866% on August 28.