First off, I'm completely new to all of this, so please go easy on me.

According to http://markets.ft.com/research/Markets/Bonds I notice that the yields on the following government bonds are as follows:

10 yr US Gov 2.38%
10 yr UK Gov 2.25%
10 yr EuroZone 0.83%

What are the basic reasons for why the yield on a 10 yr EuroZone bond to be so much lower than the other two? I thought there was a lot of uncertainty about the Euro, making it perhaps less safe to invest money, and so people would require a higher yield to compensate for this risk? (Or is that logic false? Please do criticize me).


2 Answers 2


The real question is what does FT mean by "Eurozone Bond". There is no central European government to issue bonds. What they seem to be quoting is the rate for German Bunds. Germany has a strong economy with a manageable debt load, which means it is a safe Euro denominated investment. Bunds are in high demand across the Eurozone, which drives their price up, and their yield down. Greek 10yr bonds, which are Euro denominated, are yielding over 8%.


These are yields for the government bonds. EuroZone interest rates are much lower (10 times lower, in fact) than the UK (GBP zone) interest rates. The rates are set by the central banks.

  • 1
    I can see that. But why?
    – Kian
    Nov 7, 2014 at 9:21
  • Myriad economic reasons.
    – littleadv
    Nov 7, 2014 at 16:14
  • @fushsialatitude Two of the big ones are to attract capital or encourage economic activity, both of which are important when economies are having difficulties.
    – JAGAnalyst
    Nov 7, 2014 at 16:34

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