European Stock Markets
German five-year bond yields broke above zero percent for the first
time since December 2015 after a member of the European Central Bank
Governing Council said there isn’t a single reason anymore to continue
with quantitative easing.
Yields rose across the euro area after Klaas Knot said Sunday that the program has done what could realistically be expected of it. Widely considered one of the safest assets to own, German bunds have sold off this year as the ECB is seen to be drawing closer to the first interest-rate increase since 2011.
Weakness in U.S. Treasury futures during Asian hours also weighed on sentiment, traders said.
Bond yields in major global markets are rising as central banks from the Federal Reserve to the ECB and the Bank of England begin to withdraw extraordinary monetary stimulus measures that were in place for years as part of efforts to revive inflation.
In Europe, expectations are growing that the central bank will phase out its asset-purchase program before the end of this year and raise benchmark rates in the next for the first time since 2011.
German five-year yields were two basis points higher at minus 0.02 percent as of 8:27 a.m. in London, after rising earlier to 0.003 percent. Those on their 10-year counterparts climbed two basis points to 0.65 percent.
Italian 10-year yields were little changed at 2.01 percent, with the spread over bunds declining by two basis points to 136.
Short-term yields have remained negative in European government debt markets from Germany to Italy and Spain and in recent years as the central bank kept its benchmark rates at levels below zero and pumped cash into the financial system via asset purchases.
That trend is now beginning to reverse, with markets now pricing in an increase of almost 14 basis points in the monetary authority’s deposit rate by March 2019.
ECB President Mario Draghi hasn’t specified an end date for the central bank’s unprecedented quantitative easing, but expressed increased confidence that inflation would converge to the bank’s near 2 percent target at the last decision on Thursday. Knot said that while the bank doesn’t have to communicate a fixed end date yet.
Yields rose across the euro area after Klaas Knot said Sunday that the program has done what could realistically be expected of it. Widely considered one of the safest assets to own, German bunds have sold off this year as the ECB is seen to be drawing closer to the first interest-rate increase since 2011.
Weakness in U.S. Treasury futures during Asian hours also weighed on sentiment, traders said.
Bond yields in major global markets are rising as central banks from the Federal Reserve to the ECB and the Bank of England begin to withdraw extraordinary monetary stimulus measures that were in place for years as part of efforts to revive inflation.
In Europe, expectations are growing that the central bank will phase out its asset-purchase program before the end of this year and raise benchmark rates in the next for the first time since 2011.
German five-year yields were two basis points higher at minus 0.02 percent as of 8:27 a.m. in London, after rising earlier to 0.003 percent. Those on their 10-year counterparts climbed two basis points to 0.65 percent.
Italian 10-year yields were little changed at 2.01 percent, with the spread over bunds declining by two basis points to 136.
Short-term yields have remained negative in European government debt markets from Germany to Italy and Spain and in recent years as the central bank kept its benchmark rates at levels below zero and pumped cash into the financial system via asset purchases.
That trend is now beginning to reverse, with markets now pricing in an increase of almost 14 basis points in the monetary authority’s deposit rate by March 2019.
ECB President Mario Draghi hasn’t specified an end date for the central bank’s unprecedented quantitative easing, but expressed increased confidence that inflation would converge to the bank’s near 2 percent target at the last decision on Thursday. Knot said that while the bank doesn’t have to communicate a fixed end date yet.
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