EuropeStay updated with Business News, Pakistan news, Current world news and latest world news with Business Recorder.., 01 Sep 2015 10:06:51 +0000SRA Framework 2.0en-gbGerman yields stable after inflation surprise German bond yields held firm in holiday-thinned trading on Monday, failing to take much impetus from better-than-expected euro zone inflation data or efforts by policymakers to play down the impact of China's slowing economy.

One speech in particular by US Federal Reserve vice-chair Stanley Fischer on Saturday kept alive the chance that the Fed will raise interest rates next month, the first increase in nearly a decade.

A rate hike from the world's largest economy would be felt across global markets.

Yields on U.S Treasuries and other top-rated benchmark bonds would probably rise sharply.

Other speakers at a central bankers' conference in Jackson Hole, Wyoming -- including the Bank of England's Mark Carney and the European Central Bank's Vitor Constancio -- said their economies could withstand the recent rout in China, which has set European and Asian stocks on course for their worst monthly drop in three years.

One of the fears is that reduced consumption from China will put downward pressure on already depressed oil prices and keep consumer price growth muted.

Euro zone inflation was the same in August as in July year-on-year at 0.2 percent, better than the 0.1 percent predicted by Economists in a Reuters poll.

Some market gauges indicate the euro zone may be headed back into deflation in a year's time.

While consumer price growth remains far from the ECB's target of around 2 percent, few are expecting the European Central Bank to announce more stimulus measures at its meeting this week.

"Despite sharply lower inflation expectations and slipping consumer price inflation in August, further policy easing looks premature," said Commerzbank strategist Rainer Guntermann.

Data also showed on Monday that German retail sales rose month-on-month at their strongest pace in nine months in July, reinforcing expectations that private consumption will support growth in Europe's largest economy this year.

German 10-year yields -- the euro zone benchmark -- were unchanged on the day at 0.73 percent while all other equivalents were also broadly flat on the day.

Traders said volumes were low because of a bank holiday in Britain, while month-end reporting also shackled investor activity.

While the inflation data was slightly above expectations, some analysts said it would not bring much cheer to ECB policymakers who will likely revise down their forecasts for consumer price growth this week.

In a note to clients, Barclays said stubbornly low inflation could even encourage the ECB to spring a policy surprise on Thursday.

"In all, we think the latest set of inflation data remain consistent with our recently downwardly revised euro area inflation profile for this year and next, and with our expectation that the ECB will likely engage in additional accommodative monetary policy measures by year-end, possibly as early as this week."

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui)EuropeMon, 31 Aug 2015 11:52:15 +0000
France to sell up to 8.5bn euros in bonds at Thursday auction

imagePARIS: France will sell 7.5-8.5 billion euros of long-term debt at its next regular bond auction on September 3, the Agence France Tresor said on Friday.

The three lines on offer include a new 1.0 percent 10-year bond maturing in November 2025, as well as its 1.75 percent May 2023 bond and its 2.5 percent May 2030 bond.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui)EuropeFri, 28 Aug 2015 12:37:58 +0000
Italy sells top amount at bond auction, 5- and 10-yr yields rise Italy paid more than it did a month ago to sell five- and 10-year bonds on Friday as jitters about a slowdown in Chinese growth made investors warier of holding riskier assets.

The yield on a new 10-year bond rose at auction to 1.95 percent from 1.83 percent at a sale of the same maturity a month ago.

The support provided to weaker euro zone bonds by the European Central Bank's bond-buying programme has cushioned the impact of stronger risk aversion, capping the rise in yields.

Italy sold a total of 7.5 billion euros ($8.5 billion) in bonds, at the top of its planned issue range.

The first tranche of the new BTP bond maturing in December 2025 drew bids worth 5.5 billion euros in bids, or nearly 1.4 times the amount sold.

It also sold a five-year bond due in May 2020 at an average 0.84 percent yield, up from 0.77 percent a month ago.

The bid-to-cover was 1.53 on Friday against 1.62 times.

A floating rate CCTeu bond maturing in June 2022 was sold at an average rate of 0.65 percent, against 0.67 percent in July.

The sale was covered 1.62 times, broadly in line with last month.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui)EuropeFri, 28 Aug 2015 12:34:34 +0000
German yields dip as inflation data trumps oil bounce

imageLONDON: German bond yields edged lower on Friday, defying a sudden surge in oil, as data showed consumer prices in Europe's biggest economy had been weighed down by falling energy costs.

Data from states around the country showed inflation was either unchanged or slowing in August.

The national rate due at 1200 GMT is expected to see an annualised increase of just 0.1 percent, the same as July's reading.

Investors took little impetus from a 10-percent surge in oil on Thursday, uncertain that it marks a turnaround with Brent crude having fallen this week to its lowest since 2009.

Instead, the recent oil slump, which has centred on concerns around China's economy, has weighed on market expectations for consumer price growth with some gauges suggesting the euro zone bloc could be heading back into deflation in a year's time.

"Clearly after this fall in commodity prices and inflation expectations over the last month there is a huge focus on what the actual hard data suggests," RBC rates strategist, Vatsala Datta, said.

"Oil prices are so volatile.

We have seen a surge now but it could quite easily be that we see a fall again. You have to see a sustained move higher rather than a one-off move."

The German reading has particular importance ahead of euro zone-wide data due on Monday, and a meeting of the European Central Bank (ECB) next Thursday where the bank is expected to revise down its inflation projections and possibly discuss other stimulus measures.

More than half of economists polled by Reuters now expect the ECB to extend its bond-buying quantitative easing (QE) scheme beyond its scheduled end in September 2016.

"The Council may start to mull over additional steps for the first time since the QE decision in January," Commerzbank's senior economist Michael Schubert said.

Inflation factors coupled with China worries have also reduced the likelihood that the US Federal Reserve raises interest rates next month despite a strong rebound in domestic growth.

Even with some figures such as the Fed chair Janet Yellen and ECB president Mario Draghi missing, any headlines from a meeting of central bankers in Jackson Hole will be high on the agenda on Friday.

German 10-year yields - the bloc's benchmark - were down 2 basis points on the day at 0.71 percent, while all other euro zone equivalents flat to a touch lower.

In primary markets, Italy sold 7.5 billion euros of five- and 10-year bonds, a solid result at the end of a rollercoaster week that has centred on fears of a Chinese slowdown.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui)EuropeFri, 28 Aug 2015 11:55:43 +0000
Unsure about China stimulus, investors return to safety of bonds

imageLONDON: Euro zone bond yields fell back on Wednesday as the market euphoria from China's rate cut ebbed and investors feared more stimulus may be needed to halt a slowdown in the world's second largest economy.

Yields on Europe's top-rated German debt reversed half of a 15 basis point surge seen after Tuesday's intervention by China, while world stocks failed to build on a temporary boost.

The disappointing reaction in Chinese markets led to calls for further rate cuts in the months ahead, which will only weaken the yuan and export disinflation to the rest of the world.

More importantly for global investors though, China's malaise may prevent the United States, the world's largest economy and key trade partner, from raising interest rates for the first time in nearly a decade.

"If China is unable to prevent a continued rapid slowdown, the implications will be felt around the world," said Clare Howarth of Oxford Economics.

"Our scenario modelling indicates that a hard landing would prompt the Fed to delay raising rates, possibly for many months, with other monetary authorities following suit."

German 10-year yields -- the euro zone benchmark -- dropped 7 bps to 0.68 percent, but are still far from three-month lows of 0.51 percent hit on Monday when a slump in Chinese stocks sent investors scrambling for safety.

Lower-rated euro zone equivalents from the likes of Portugal, Spain and Italy were also down by 2-5 bps at 2.69 percent, 2.09 percent and 1.96 percent.

Many analysts said China's actions -- it lowered its one-year benchmark bank lending rate by 25 basis points to 4.6 percent and reduced the reserve requirement ratio by 50 basis points to 18.0 percent for most big banks -- will not be enough to shore up the slowdown in the economy.

In fact some banks are calling for one or two more rate cuts in the months ahead.

Oil markets, which have been shaken by weakening consumption and a supply gut, failed to take much of a boost from China's intervention, with prices remaining just above 6-1/2-year lows.

This has had a knock-on effect on the market's expectations for inflation around the world. Investors are still betting the euro zone, for instance, will head back into deflation in a year's time which will only up the pressure on the European Central Bank to expand its bond-buying programme.

"Important links are likely to stem from potential disinflationary trends - both through exchange rate appreciation, but perhaps more importantly through the reduction in demand for commodities from emerging markets," said RBC in a note to clients. "In this respect, the market measure of medium-term inflation expectations is worth keeping a close eye on."

Germany, the euro zone's powerhouse economy, will release preliminary inflation data for August on Friday.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui)EuropeWed, 26 Aug 2015 12:03:24 +0000
Croatia beats targets in T-bill auctions, yields mostly lower Croatia sold more Treasury bills than planned at auctions on Tuesday, while yields mostly fell, Finance Ministry data showed.

The investors mostly focused on the longest-maturity one-year kuna bills whose yield was the only one that remained unchanged, at 1.50 percent.

The sale of Treasury bills has been largely successful in recent months amid a shortage of other attractive investment instruments in the newest European Union member.

Croatia's total Treasury bill debt amounts to 20.94 billion kuna ($3.19 billion) in local currency and 90.7 million euros ($104.31 million).

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui)EuropeTue, 25 Aug 2015 12:11:44 +0000
German bond yields drop after Fed highlights inflation, growth lag German bond yields fell sharply on Thursday morning as European investors reacted to the release of minutes from the US Federal Reserve's latest meeting, which noted lagging inflation and the weak world economy.

The minutes released late on Wednesday came as oil prices fell to a 6-1/2-year low, and led some to doubt that the world's largest economy is gearing up to raise interest rates for the first time in nearly a decade next month.

German 10-year yields -- the euro zone benchmark -- fell 5 basis points in early trading to touch 0.59 percent. US Treasury yields have fallen 8 bps since the release of the minutes on Wednesday and were seen trading at 2.12 percent at 0610 GMT.

Bund futures surged 60 ticks to 155.52.

Copyright Reuters, 2015

]]> (Parvez Jabri)EuropeThu, 20 Aug 2015 06:28:07 +0000
Euro zone yields stabilise as global inflation slowdown fears ease Euro zone bond yields settled on Wednesday after a sharp rise the previous day caused by a surprise uptick in UK inflation, with investors wary that a similar reading in the United States later could mean a Federal Reserve rate hike was imminent.

Tuesday's UK data, showing core inflation hitting a five-month high, eased some concerns that a wavering Chinese economy would fuel a significant slowdown in inflation on a global scale.

Such worries have pushed yields sharply lower in recent weeks as parts of the market expected the Fed and the Bank of England to set aside any plans for a near-term rate hike. Some analysts and investors even made the case that the European Central Bank might be forced to extend its 1 trillion euro bond buying programme beyond its scheduled end in September 2016.

But euro zone yields held at higher levels on Wednesday even though Chinese stock markets extended their recent plunge.

US inflation data is due at 1230 GMT and minutes from the Fed's last meeting will be released later. Both will be scoured for clues on whether the Fed will raise interest rates next month for the first time in nearly a decade.

Any mention of the slowdown in China or worries about oil prices trading near six-year lows could be seen as a sign the Fed is prepared to wait longer.

"We can have a long period of zero or very low inflation, but the probability of big deflation in Europe has disappeared," said Eric Vanraes, a fixed income portfolio manager at EI Sturdza Investment Funds.

"But the behaviour of central banks in Europe and the US will stay dovish because there is no inflation and no growth.

The central banks are still playing music so you can continue to dance." German 10-year Bund yields held steady at 0.64 percent.

Yields on lower-rated euro zone bonds in Spain , Italy and Portugal were 1-2 basis points lower, having risen 4-9 bps the previous day. They traded at 1.98 percent, 1.79 percent and 2.46 percent, respectively.

Bund futures were 4 ticks higher at 154.86. "The upside surprise in UK inflation put pressure on the Bund future while weaker Asian stock markets provide support," said Benjamin Schroeder, rate strategist at Commerzbank.

"The US CPI release might lead to some stabilisation, but even then the focus might remain more on the near-term developments where commodities continue trading subdued, and an early Fed hike might be feared to turn out as a policy error which could choke off the underlying price momentum."

Fitch upgraded its credit rating for Greece on Tuesday, saying the bailout agreement the country struck with foreign lenders reduced the chance of default.

The rating is now CCC, up from CC. German lawmakers voted in favour of the deal on Wednesday. Greek 10-year yields were 9 basis points higher at 9.37 percent, having fallen from almost 20 percent in the past five weeks.

On the supply side, Germany sold 4.1 billion euros of a new two-year bond, at an yield of minus 0.25 percent.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui)EuropeWed, 19 Aug 2015 13:48:01 +0000
Romania sells 300mn lei of June 2019 T-Bonds Romania sold a planned 300 million lei ($75.22 million) worth of June 2019 treasury bonds on Monday, with the average accepted yield at 2.42 percent, central bank data showed.

Debt managers last sold the paper in July at an average yield of 2.46 percent. So far this year, Romania has issued debt worth just under 22 billion lei.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui)EuropeMon, 17 Aug 2015 12:52:24 +0000
Greek deal shields weaker euro debt from China-driven flight to safety Spanish and Italian yields fell on Tuesday as a bailout deal for Greece insulated lower-rated euro zone bonds from a flight to safe havens triggered by China's devaluation of its yuan currency.

A Greek Finance Ministry official said the pact with international lenders would be worth up to 85 billion euros ($94 billion) in fresh loans over three years. Crucially, it will save Athens from default on a debt repayment of 3.2 billion euro due to the European Central Bank on Aug. 20.

Greek 10-year yields fell almost one percentage point to 10.29 percent, while two-year yields dropped nearly five percentage points to just below 15 percent.

In a global flight towards top-rated assets, which pushed yields on benchmark Bund yields and US Treasuries 7-10 basis points lower and weakened stock markets in Europe and Asia, the Greek deal meant peripheral bonds held strong.

The yuan devaluation raised concerns about the extent of the economic slowdown in the world's second biggest economy and its knock-on impact on other regions.

"The Chinese devaluation was taken as 'things are not going that well in China' and this is a risk-off move," said Martin van Vliet, senior rate strategist at ING.

"With the Greek deal secured and the ECB continuously buying bonds, peripheral spreads would have been much tighter otherwise." Spanish and Italian 10-year yields fell 5 basis points each to 1.93 percent and 1.78 percent respectively, while Portuguese equivalents dropped 8 basis points to 2.34 percent.

The fact that a slowing Chinese economy may dampen inflation prospects in the euro zone stoked expectations the ECB could provide more stimulus than the planned trillion-euro bond buying programme running until September 2016.

"With China slowing down, you see oil and other basic materials (prices) collapsing and this will exert downward pressure on headline inflation," said Sergio Capaldi, fixed income strategist at Intesa Sanpaolo.

"There is a need to further improve the expansionary position of the ECB's policy. In the case of more weakening in inflation we could see additional measures."

The ECB's preferred measure of the market's long-term inflation expectations, the five-year, five-year breakeven forward, traded around its lowest in two months, just above 1.7 percent.

One-year euro zone inflation swaps dropped below 0.20 percent on Tuesday, the lowest in over five months, and down from almost 1 percent in June. In the past month, markets have pushed back expectations of when the ECB will start normalising its policy by a whole year, to 2019.

The yuan move, aimed at boosting the economy, in fact exacerbated concerns about it.

"It's a reflection of how concerned Chinese authorities are about the economy, which is slowing faster than expected," said Nick Stamenkovic, bond strategist at RIA Capital Markets.

Copyright Reuters, 2015

]]> (Shoaib-ur-Rehman Siddiqui)EuropeTue, 11 Aug 2015 16:47:29 +0000