ANL 35.31 Decreased By ▼ -0.69 (-1.92%)
ASC 14.75 Increased By ▲ 0.05 (0.34%)
ASL 26.00 Increased By ▲ 0.30 (1.17%)
AVN 89.10 Decreased By ▼ -0.40 (-0.45%)
BOP 7.77 Increased By ▲ 0.03 (0.39%)
BYCO 10.05 Decreased By ▼ -0.03 (-0.3%)
DGKC 122.65 Decreased By ▼ -1.15 (-0.93%)
EPCL 58.20 Increased By ▲ 0.05 (0.09%)
FCCL 23.88 Decreased By ▼ -0.17 (-0.71%)
FFBL 28.75 Decreased By ▼ -0.40 (-1.37%)
FFL 15.63 Decreased By ▼ -0.12 (-0.76%)
HASCOL 9.60 Decreased By ▼ -0.05 (-0.52%)
HUBC 79.14 Increased By ▲ 0.39 (0.5%)
HUMNL 6.41 Decreased By ▼ -0.03 (-0.47%)
JSCL 20.80 Decreased By ▼ -0.40 (-1.89%)
KAPCO 39.90 No Change ▼ 0.00 (0%)
KEL 3.78 No Change ▼ 0.00 (0%)
LOTCHEM 16.60 Decreased By ▼ -0.08 (-0.48%)
MLCF 46.00 Decreased By ▼ -0.31 (-0.67%)
PAEL 35.56 Decreased By ▼ -0.09 (-0.25%)
PIBTL 10.34 Increased By ▲ 0.12 (1.17%)
POWER 9.28 Increased By ▲ 0.09 (0.98%)
PPL 85.90 Decreased By ▼ -0.33 (-0.38%)
PRL 24.72 Decreased By ▼ -0.18 (-0.72%)
PTC 9.90 Decreased By ▼ -0.01 (-0.1%)
SILK 1.26 Increased By ▲ 0.02 (1.61%)
SNGP 41.63 Decreased By ▼ -0.37 (-0.88%)
TRG 165.10 Increased By ▲ 1.80 (1.1%)
UNITY 30.40 Increased By ▲ 0.02 (0.07%)
WTL 1.56 Increased By ▲ 0.02 (1.3%)
BR100 4,874 Increased By ▲ 12.26 (0.25%)
BR30 25,700 Increased By ▲ 11.25 (0.04%)
KSE100 45,306 Increased By ▲ 75.45 (0.17%)
KSE30 18,538 Increased By ▲ 28.18 (0.15%)

Coronavirus
VERY HIGH
Pakistan Deaths
16,243
14924hr
Pakistan Cases
756,285
612724hr
Sindh
272,197
Punjab
267,572
Balochistan
20,822
Islamabad
69,556
KPK
105,438
Markets

Euro zone bonds' reflation sell-off stalls; focus on ECB minutes

  • In the euro zone, after rising 11 basis points in three sessions to its highest since June 2020, Germany's 10-year Bund yield dipped 1 basis point on Wednesday.
  • The euro rose to its highest since 2018 above $1.23 in early January. It has eased since to around $1.208 currently, but is still up 8% since the start of 2020.
18 Feb 2021

AMSTERDAM: Euro zone bonds showed further signs of stabilisation on Thursday, with German yields edging up slightly after a hefty sell-off earlier in the week driven by expectations of rising inflation.

Expectations of economic recovery from the COVID-19 crisis and extraordinary fiscal stimulus in the United States caused a surge in global bond yields led by US Treasuries in recent sessions.

But, with stock markets weakening on Wednesday, the sell-off showed signs of a pause.

In the euro zone, after rising 11 basis points in three sessions to its highest since June 2020, Germany's 10-year Bund yield dipped 1 basis point on Wednesday. On Thursday, its yield was up less than 2 basis points to -0.35% at 1258 GMT.

Christian Lenk, rates strategist at DZ Bank, said the pause in the sell-off showed "some kind of exhaustion" with the reflation trade for the time being, although he expects the trade to hold up in the longer term.

Lenk said minutes from the Federal Reserve, in which the US central bank displayed willingness to steer past coming inflation, may have "led to some rethinking of market participants that the inflation trade has run a little too far."

The focus was on the European Central Bank's January meeting accounts, where policymakers highlighted inflation is still distant from the bank's target and a strong euro posed additional danger, while they were more sanguine about a rise in bond yields given borrowing costs remain low.

But with these factors all previously flagged, the minutes had little market impact as expected.

At its meeting in January the ECB kept its policy rate and stimulus package unchecked, but its messaging had been perceived as hawkish, causing a big sell-off in Southern European bonds.

Governing Council member Klaas Knot said afterwards that the ECB was ready to cut its deposit rate further below zero if necessary to keep its inflation target in sight.

The euro rose to its highest since 2018 above $1.23 in early January. It has eased since to around $1.208 currently, but is still up 8% since the start of 2020.

In the primary market, Spain raised 5.11 billion euros ($6.17 billion) via an auction of bonds due between 2024 and 2040, while France raised over 10 billion euros from the sale of bonds due between 2024 and 2029, and held a separate auction for inflation-linked bonds.