Managers tip eurozone debt rally to continue after ECB action

Fund managers and economists are turning more bullish on eurozone debt and asset-backed securities after the European Central Bank (ECB) cut rates to a new historic low.

In a series of moves last week, the central bank cut interest rates to 0.15% from 0.25%, and cut the deposit rate from zero to -0.1%, effectively meaning it will now cost banks money to deposit funds with the ECB. Other packages announced by ECB president Mario Draghi included two targeted long-term refinancing operations (LTROs), as well as asset-backed security purchases. Eurozone debt rallied across the board: 10-year bund yields fell 4bps from 1.39% to 1.35% in the immediate aftermath of the news, while Italian and Portuguese 10-year yields fell a similar amount. The peripheral...