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Pressure on bond markets from looming interest rate hikes

The markets were negatively affected by the “aggressive” statements of central bankers and other members of the central bank. of the European Central Bank, who are pushing for more interest rate hikes, seeing that inflation cannot be contained.

However, the minutes of the ECB’s latest board meeting are expected to be released this week, providing a clearer picture of central bankers’ intentions. However, the combination of higher interest rates with the continuous increase in energy prices, causes reasonable concern among analysts, for the growth potential of the European economy.

On the other side of the Atlantic, markets are already discounting that the US Federal Reserve (FED) will raise its key interest rate by 0.5% in September – a development that favors the dollar. It is indicative that in the early afternoon, once again, the euro fell below 1:1 parity against the dollar and was trading at $0.9970.

Transactions of 28 million euros were recorded in HDAT, of which 6 million euros related to purchase orders. The yield on the 10-year bond stood at 3.69%, versus 1.26% for the corresponding German bond, bringing the spread to 2.43%.

In the foreign exchange market, the euro is moving down against the dollar. By early afternoon, the European currency was trading at $1.0993 from $1.0034 at the market open.

The indicative price for the euro/dollar exchange rate. announced by the ECB, stood at $1.0001.

Source: Capital

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