Latest News

Euro zone yields rise on inflation, bond supply concerns


Euro zone yields rise on inflation, bond supply concerns By Reuters

Breaking News


Economy 12 minutes ago (Nov 07, 2022 16:38)

© Reuters. FILE PHOTO: The euro sign is photographed in front of the former head quarter of the European Central Bank in Frankfurt, Germany, April 9, 2019. Picture is taken on slow shutter speed while the camera was moved. REUTERS/Kai Pfaffenbach

By Stefano Rebaudo and Harry Robertson

LONDON (Reuters) – Euro zone borrowing costs edged higher on Monday as traders awaited key U.S. inflation data later in the week, amid fading hopes for a quick end to the central bank rate hiking cycle.

Analysts said potential upside surprises in consumer price data and expectations of increasing bond supply due to public spending to tackle the energy crisis would prop up German Bund yields in the medium term.

Germany will spend 83.3 billion euros, or 42% of a major protection scheme, to finance a cap on gas and power prices in 2023, a draft proposal seen by Reuters showed.

Meanwhile, German industrial production grew in September, supporting the view that the European Central Bank (ECB) will keep raising rates aggressively.

Yields on 10-year Bunds were last up 3 basis points (bps) at 2.319%, after moving in and out of positive territory earlier in the session. They hit an 11-year high at 2.53% on Oct. 21.

U.S. consumer prices data for October is due on Thursday, and will be closely watched for its implications for Federal Reserve policy.

“I don’t think the market will do much ahead of U.S. inflation data,” said Massimiliano Maxia, senior fixed income specialist at Allianz (ETR:ALVG) Global Investors.

The year-on-year U.S. inflation rate is expected to have cooled to 8% in October from 8.2% in September, but traders will look out for any signs that core inflation – which strips out food and energy – remains strong.

“Markets expect a (Fed) rate hike of 50 bps in December and 25 bps early next year, but they are ready to change their view pretty quickly if consumer price numbers surprise on the upside,” he added.

In Europe, investors grew optimistic that the ECB could soon start to slow down on rate hikes after its meeting last month, but the mood has since become more pessimistic.

Italy’s 10-year government bond yield rose 1 bp to 4.469% on Monday. The spread between Italian and German 10-year yields fell 2 bps to 214 bps.

George Buckley, an economist at Nomura, highlighted in a research note that “numerous ECB Governing Council members came out saying there was much more to do on rates,” after a “dovish interpretation of the October ECB meeting.”

France’s central bank chief Francois Villeroy de Galhau said the central bank must not stop raising interest rates until underlying inflation has peaked, but it may slow the pace of hikes once rates hit a level that starts to restrict growth.

We believe core European inflation “will strengthen, underscoring our view that the ECB will ultimately be forced to hike by yet another 75bp in December,” Nomura’s Buckley added.

Euro zone yields rise on inflation, bond supply concerns

UK bonds sag after soft demand at first BoE sale of medium-dated giltsBy Reuters – Nov 07, 2022

By David Milliken LONDON (Reuters) -The Bank of England received soft demand on Monday at its first auction of 750 million pounds ($859 million) of medium-dated government bonds…

UK pledges more than $115 million to developing economies to tackle climate changeBy Reuters – Nov 07, 2022

LONDON (Reuters) -Britain’s foreign minister James Cleverly on Monday will announce investments of more than 100 million pounds ($115 million) to support developing countries in…

UK watchdog says regulating pension fund consultants would contain risks betterBy Reuters – Nov 07, 2022

LONDON (Reuters) – Regulating consultants who advise pension funds would ensure greater focus on managing risks which can emerge from the sector, such as recent difficulties with…

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning

© 2007-2022 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

UK bonds sag after soft demand at first BoE sale of medium-dated gilts

Previous article

: Redfin stock falls as much as 15% after analyst says sell

Next article

You may also like


Leave a reply

Your email address will not be published. Required fields are marked *

More in Latest News