German bonds ‘won’ by the war in Ukraine

The German bond traded today, with the result that its performance returned to negative territory, while the rest of the eurozone markets did not follow.

Markets are now moving exclusively in the wake of developments on Ukraine’s war fronts. The possibility of a significant decline in GDP – but which is not in danger of turning into a recession – if the Ukrainian crisis lasts for a long time, led today the yield of the 10-year German bond to the largest daily decline since 2011. At the same time the war feeds inflationary pressures, as after the Russian invasion the prices of oil and gas have risen by about 60% (It is noted that the price of oil is maintained above $ 100 a barrel).

Meanwhile, the economic sanctions imposed on Russia – mainly those related to the freezing of the Central Bank’s assets abroad and the exclusion of the country from international markets – had as a collateral loss the rise in interest rates in the dollar market. These are the lending rates in the interbank market (3-month euro cross -currency swap) which jumped to the highest level since March 2020. The specific interest rate a month ago was around 8 basis points (0.08%) while today it reached 38 basis points (0.38%).

In the domestic market, and more specifically in HDAT, transactions amounting to 84 million euros were recorded, of which 52 million related to purchase orders. The yield on the 10-year bond closed at 2.40%, from 2.61% yesterday, compared to -0.07% of the corresponding German bond, resulting in a margin of 2.47% from 2.46%, which closed yesterday.

The dollar is moving higher in the foreign exchange market today as it was trading early in the afternoon at $ 1.1141 from the level of $ 1.1219 that the market opened.

The indicative price for the euro / dollar exchange rate. announced by the ECB amounted to $ 1.1162.

SOURCE: ΑΠΕ-ΜΠΕ