ANL 36.00 Decreased By ▼ -0.55 (-1.5%)
ASC 14.70 Decreased By ▼ -0.10 (-0.68%)
ASL 25.70 Decreased By ▼ -0.40 (-1.53%)
AVN 89.50 Decreased By ▼ -1.40 (-1.54%)
BOP 7.74 Decreased By ▼ -0.06 (-0.77%)
BYCO 10.08 Decreased By ▼ -0.13 (-1.27%)
DGKC 123.80 Decreased By ▼ -1.40 (-1.12%)
EPCL 58.15 Increased By ▲ 0.65 (1.13%)
FCCL 24.05 Decreased By ▼ -0.30 (-1.23%)
FFBL 29.15 Increased By ▲ 0.35 (1.22%)
FFL 15.75 Decreased By ▼ -0.30 (-1.87%)
HASCOL 9.65 Decreased By ▼ -0.14 (-1.43%)
HUBC 78.75 Decreased By ▼ -0.25 (-0.32%)
HUMNL 6.44 Decreased By ▼ -0.33 (-4.87%)
JSCL 21.20 Decreased By ▼ -0.61 (-2.8%)
KAPCO 39.90 Decreased By ▼ -0.20 (-0.5%)
KEL 3.78 Decreased By ▼ -0.05 (-1.31%)
LOTCHEM 16.68 Increased By ▲ 0.07 (0.42%)
MLCF 46.31 Decreased By ▼ -0.84 (-1.78%)
PAEL 35.65 Increased By ▲ 0.42 (1.19%)
PIBTL 10.22 Decreased By ▼ -0.13 (-1.26%)
POWER 9.19 Decreased By ▼ -0.06 (-0.65%)
PPL 86.23 Increased By ▲ 0.21 (0.24%)
PRL 24.90 Decreased By ▼ -0.42 (-1.66%)
PTC 9.91 Decreased By ▼ -0.10 (-1%)
SILK 1.24 No Change ▼ 0.00 (0%)
SNGP 42.00 Decreased By ▼ -0.05 (-0.12%)
TRG 163.30 Decreased By ▼ -1.45 (-0.88%)
UNITY 30.38 Decreased By ▼ -0.38 (-1.24%)
WTL 1.54 Increased By ▲ 0.06 (4.05%)
BR100 4,862 Decreased By ▼ -11.22 (-0.23%)
BR30 25,689 Decreased By ▼ -158.39 (-0.61%)
KSE100 45,230 Decreased By ▼ -81.04 (-0.18%)
KSE30 18,510 Decreased By ▼ -34.78 (-0.19%)

Coronavirus
VERY HIGH
Pakistan Deaths
15,872
11824hr
Pakistan Cases
739,818
539524hr
Sindh
270,310
Punjab
258,441
Balochistan
20,580
Islamabad
68,066
KPK
102,290
Business & Finance

ECB getting uncomfortable with rise in yields

  • Risk-free overnight indexed swap rates and sovereign yields are particularly important, because they are good early indicators of what happens at downstream stages of monetary policy transmission.
  • "Accordingly, the ECB is closely monitoring the evolution of longer-term nominal bond yields," she said.
22 Feb 2021

FRANKFURT: The European Central Bank is "closely monitoring" the recent rise in government bond yields, ECB President Christine Lagarde said on Monday, the clearest sign yet that policymakers are becoming uncomfortable with the recent surge in borrowing costs.

Euro zone bond yields have risen sharply since the start of the year, mirroring a similar move in US Treasuries, but the ECB has so far played down these moves, arguing that nominal yields are not necessarily an appropriate benchmark.

But real, or inflation-adjusted, yields have also started to rise in recent days, fuelling some market speculation that the ECB may have to intervene, first verbally, then by stepping up bond purchases.

"Risk-free overnight indexed swap rates and sovereign yields are particularly important, because they are good early indicators of what happens at downstream stages of monetary policy transmission," Lagarde said in a speech.

"Accordingly, the ECB is closely monitoring the evolution of longer-term nominal bond yields," she said.

Yields fell sharply on Lagarde's comments.

Germany's 10-year Bund yield was last down 4 basis points on the day at -0.35%, having hit an eight-month high at -0.278% in early trade. Italian 10-year bond yields fell almost 4 bps to 0.58%.

With around 1 trillion euros still left unspent in the Pandemic Emergency Purchase Programme, the ECB had "considerable firepower and flexibility", to guide financing conditions, Lagarde said.

The ECB has long argued that, even if the purchase quota was exhausted, policymakers could still add to it to ensure the bloc could come out of its biggest crisis yet.

Lagarde also reaffirmed the ECB's pledge to preserve favourable financing during the pandemic. That commitment involved a focus on the entire chain of policy transmission, from risk-free rates to government borrowing costs, capital markets, and bank lending for firms and households.

Ten-year inflation-linked German government bonds yielded -1.30% early on Monday after trading as low as -1.66% in early February.