Southern European bond yields touch record lows

Southern Europe's borrowing costs hit new record lows on Tuesday as concern about rising Covid-19 cases in major economies offset the promise of a return to normality due to a vaccine and cautious optimism about Brexit trade talks.

Renewed uncertainty about the economic outlook underpinned bond markets across the euro area just days after the European Central Bank unleashed fresh stimulus to shore up the economy from the coronavirus shock.

Peripheral bond markets, which in recent months have tended to benefit when sentiment towards the recovery improves but also when uncertainty fuels expectations for ECB stimulus, continued to outperform.

Ten-year bond yields in Italy, Spain, Portugal and Greece all fell to new record lows.

"The market remains wary of the light at the end of the tunnel," said Commerzbank rates strategist Rainer...