Euro zone bond yields fall as big rate hike bets fall sharply

Euro zone bond yields fall as big rate hike bets fall sharply By Reuters

Breaking News

‘;

Economy 3 minutes ago (Sep 06, 2022 07:26AM ET)

(C) 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/File Photo

LONDON (Reuters) – Euro zone government bond yields fell sharply on Tuesday, as expectations for a massive interest rate raise by the European Central Bank this week eased following media reports that policymakers are considering a smaller hike.

After initially rising, by 1030 GMT yields were down sharply across the bloc. German yields were down between 6 and 20 basis points <DE2YT=RR, with the 2-year as low as 0.96%, its lowest since Aug. 26.

Other yields were down between 5 and 10 basis points, with several hitting their lowest since late August

Jan von Gerich, an analyst at Nordea, said media reports, including one that pointed to ECB policymakers debating a 60 basis point move instead of 75 bps, were behind the drop in yields, although he wasn’t persuaded by them.

“The market had decided clearly it was going to be 75 basis points but it is more open based on these reports,” he said.

“I don’t think it’s been planted by the ECB to talk the market down. I still think that the hawks are in control and they will deliver 75 basis points,” he added, noting that before a blackout period ended ECB policymakers had plenty of chances to push back on rising expectations for a supersized hike.

Money markets are now pricing in a 67% chance of a 75 bps rate hike, down from almost 90% earlier on Tuesday.

Markets also anticipate a further hike worth at least 50 bps at the ECB’s October meeting as investors position for front-loaded rate increases before the economic outlook deteriorates further due to the energy shock.

Bond yields have been very volatile in recent weeks. They had jumped on Monday, led by a rise in the Italian 10-yield towards 4%, after Russia’s decision to keep its main gas pipeline to Germany shut exacerbated inflation and ECB rate-hike fears.

In Tuesday trade, the Italian 10-year yield was down 10 bps higher at 3.85% .

In a busy day for government bond sales, Italy’s Treasury started marketing a new green government bond via a syndicate of banks on Tuesday, in a deal closely watched by the market against a backdrop of a looming snap election and new ECB tightening.

France started the sale of a 20-year syndicated bond and has seen 23 billion euros of demand, according to a lead manager memo seen by Reuters.

U.S. markets reopen after Monday’s public holiday, with a rise in U.S. Treasury yields pushing higher in London trade.

Euro zone bond yields fall as big rate hike bets fall sharply

Reinsurance rates to rise in “mid-single digit” range-S&P GlobalBy Reuters – Sep 06, 2022

LONDON (Reuters) – Reinsurers could raise premium rates in the “mid-single digit” percent range at the key Jan. 1 renewal season, given pressures from inflation, war in Ukraine and…

U.S. Commerce aims to seek chips funding proposals by FebruaryBy Reuters – Sep 06, 2022

By David Shepardson WASHINGTON (Reuters) -The U.S. Commerce Department said Tuesday it hopes by February to begin seeking applications for $39 billion in government semiconductor…

Czech EU presidency says two proposals exist for setting maximum energy pricesBy Reuters – Sep 06, 2022

PRAGUE (Reuters) – There are two proposals in the European Union on how to set maximum prices on energy that the bloc’s energy ministers will discuss on Friday, Czech Industry…

Our Apps



Terms And Conditions
Privacy Policy
Risk Warning

(C) 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.

About the author

Related