AGL 5.70 Decreased By ▼ -0.13 (-2.23%)
ANL 9.10 Increased By ▲ 0.07 (0.78%)
AVN 79.16 Increased By ▲ 0.36 (0.46%)
BOP 5.21 Increased By ▲ 0.05 (0.97%)
CNERGY 4.73 Increased By ▲ 0.05 (1.07%)
EFERT 81.11 Increased By ▲ 0.56 (0.7%)
EPCL 50.75 Decreased By ▼ -0.96 (-1.86%)
FCCL 13.52 Decreased By ▼ -0.09 (-0.66%)
FFL 5.76 Decreased By ▼ -0.09 (-1.54%)
FLYNG 7.29 Increased By ▲ 0.17 (2.39%)
FNEL 4.84 Decreased By ▼ -0.01 (-0.21%)
GGGL 8.89 Decreased By ▼ -0.01 (-0.11%)
GGL 15.80 Decreased By ▼ -0.25 (-1.56%)
HUMNL 5.83 Increased By ▲ 0.03 (0.52%)
KEL 2.59 Decreased By ▼ -0.01 (-0.38%)
LOTCHEM 29.80 Decreased By ▼ -0.21 (-0.7%)
MLCF 25.15 Decreased By ▼ -0.25 (-0.98%)
OGDC 72.70 Increased By ▲ 0.55 (0.76%)
PAEL 15.47 Decreased By ▼ -0.02 (-0.13%)
PIBTL 5.13 Increased By ▲ 0.12 (2.4%)
PRL 16.50 Increased By ▲ 0.10 (0.61%)
SILK 1.10 No Change ▼ 0.00 (0%)
TELE 9.55 Decreased By ▼ -0.10 (-1.04%)
TPL 7.33 Increased By ▲ 0.03 (0.41%)
TPLP 19.26 Increased By ▲ 0.03 (0.16%)
TREET 21.84 Decreased By ▼ -0.11 (-0.5%)
TRG 144.10 Decreased By ▼ -0.87 (-0.6%)
UNITY 17.52 Increased By ▲ 0.90 (5.42%)
WAVES 10.00 No Change ▼ 0.00 (0%)
WTL 1.37 No Change ▼ 0.00 (0%)
BR100 4,258 Increased By 27.9 (0.66%)
BR30 15,841 Increased By 19.2 (0.12%)
KSE100 42,374 Increased By 302.3 (0.72%)
KSE30 15,665 Increased By 161 (1.04%)
Markets

Germany's Bund hits 2-year high as inflation expectations rise

  • Euro zone inflation accelerated as expected in April because of a sharp rise in the costs of energy and services, data showed. British consumer price inflation more than doubled in April.
  • A key gauge of euro zone inflation expectations - the five-year, five-year inflation forward - rose to its highest since December 2018.
Published May 19, 2021
Follow us

LONDON: Euro zone government bonds yields rose on Wednesday, with the benchmark German Bund yield rising to a two-year high in early trading as investors increasingly priced in the possibility of the ECB slowing its bond-buying as the economy recovers.

Euro zone inflation accelerated as expected in April because of a sharp rise in the costs of energy and services, data showed. British consumer price inflation more than doubled in April.

Core government bond yields were up by around 3 basis points in early trading, while Italy's 10-year yield reached its highest since September 2020.

A key gauge of euro zone inflation expectations - the five-year, five-year inflation forward - rose to its highest since December 2018.

The moves follow a big sell-off in euro area government bonds on Monday, driven by speculation that the ECB may slow its emergency bond buying as the economy recovers from the COVID-19 pandemic.

At 1125 GMT, Germany's 10-year bond yield was up 2 bps at -0.089%. Italy's 10-year yield was up 3 bps at 1.123%, having reached as high as 1.16% earlier in the session .

"I actually think that most of the widening (between German and Italian yields) has to do with the backdrop of rising rates_ I think Italy's more vulnerable to this rising rates environment because they just have so much debt to sell," said Antoine Bouvet, senior rates strategist at ING.

US Treasuries were calmer, with the 10-year yield up 2 bps and trading within the month's ranges.

SUPPLY PRESSURE

In terms of issuance, Finland started selling its 3 billion euro ($3.66 billion) 10-year bond via a syndicate of banks. Germany sold 3.36 billion euros of 10-year bonds.

The European Union launched bonds on Tuesday that will complete the bulk of funding for its SURE unemployment scheme.

"Supply pressure is felt a lot more acutely now that there is a growing consensus that the euro rates have touched higher to reflect the economic recovery," said ING's Bouvet.

More supply at a time when buyers are cautious can cause yields to rise because buyers demand a higher yield to compensate for the perceived risk of holding a bond that could lose value due to inflation.

Later in the session the latest FOMC meeting minutes will be published. There are also a number of European Central Bank speakers, including chief economist Philip Lane, who is due to speak at 1550 GMT.

Comments

Comments are closed.

Germany's Bund hits 2-year high as inflation expectations rise

Pakistan receives $500mn from AIIB: finance ministry

Rupee remains stable at 223.95 against US dollar

Hina Rabbani Khar meets interim Afghan government leadership on one-day Kabul trip

Oil jumps on hopes for easing in China’s COVID controls

Islamabad court extends Azam Swati’s remand for 4 days

S&P Global lowers 2023 growth forecast for emerging markets

PD prepares $496m gas pipeline augmentation plan

IMF, govt begin virtual engagement

Dar willing to allow sugar export?

Tax-exempted areas: FBR sets up checkposts to monitor supplies