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The euro and bond yields are on the rise

Eurozone bond yields are showing a rise today as the European Central Bank table seems to be discussing a larger increase in interest rates, by 0.75%, at the Governing Council meeting on September 8.

The mood worsened further after the speech by the head of the US Federal Bank (Fed) Jerome Powell at Jackson Hall. The central banker warned that controlling inflation would cause “some pain” for households and businesses – and dampen momentum in the labor market. Mr. Powell said central bank officials know inflation is still too high and that the Fed will raise interest rates until the economy is under control. It should be noted that the market has discounted the fact that three more interest rate hikes are expected this year.

In HDAT, transactions of 32 million euros were recorded, of which 2 million euros related to purchase orders. The yield on the 10-year bond stood at 3.92% from 3.94% yesterday versus 1.42% for the German counterpart, bringing the spread to 2.50% from 2.59% yesterday.

In the foreign exchange market, Powell’s statements had the effect of significantly strengthening the euro, which was traded in the early afternoon at $1.0033 from the level of $0.9977 that opened the market. The indicative price for the euro/dollar exchange rate announced by the ECB was set at $1.007.

Source: Capital

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