Greek bonds reacted positively to the ECB’s decision to continue trading after the end of the pandemic program, exceeding the limit that will apply to other countries. After all, as the head of the ECB Christine Lagarde admitted, this decision is “a strong message of support to Greece, which does not yet have an investment grade”.
Following the announcement of the ECB’s decision, which was not unanimous as the so-called “tough central bankers” participating in it called for a more drastic withdrawal of ECB support measures, Greek bond yields fell sharply. 10-year bond yields fell to 1.12% from 1.36% at the beginning of the week.
The rest of the eurozone bond markets reacted accordingly, recovering from the “shock” they had suffered a little earlier when the Bank of England suddenly raised its interest rates.
The ECB forecasts for inflation and GDP in the euro area
In addition to the ECB’s decisions to continue, albeit at a slower pace, the bond market program, its revised forecasts, mainly for inflation, have significantly affected the direction of the market. Specifically, the ECB revised significantly upwards and specifically to 3.2% its inflation forecast for 2022 from 1.7% forecast last June. While for 2023 the forecast increased marginally to 1.8% from 1.5%. If these forecasts appear to be coming true over time, analysts estimate that the ECB will not raise interest rates until the end of 2022. On the growth front, the ECB has revised its 2022 forecast to 4.2% from 4.65 in June, while on the contrary it now forecasts a higher growth rate for 2023 (2.9%) than it forecast last June (2.1%).
In the Electronic Transaction System of the Bank of Greece (HDAT) today were recorded transactions of 329 million euros, of which 151 million euros related to purchase orders. The yield of the 10-year benchmark bond fell to 1.20% from 1.31% that closed yesterday against -0.34% of the corresponding German, resulting in a margin of 1.64% from 1.68%.
The euro is moving higher in the foreign exchange market today as it traded early in the afternoon at $ 1.1307 from the $ 1.1284 that the market opened.
The indicative price for the euro / dollar exchange rate announced by the European Central Bank was 1.1336 dollars.
SOURCE: ΑΠΕ-ΜΠΕ
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