Bond yields in the Euro zone to fall after the speech of fed’s Powell

  • Bond yields in the Euro zone to fall after the speech of fed’s Powell
    Independent.t. E.
    Government bond yields in the Euro zone fell on Monday after the head of the Federal reserve system Jerome Powell confirmed the prospects for a sustained increase in interest rates in the largest economy in the world.
    https://www.independent.ie/business/world/euro-zone-bond-yields-fall-after-feds-powells-speech-37255268.html
    https://www.independent.ie/business/world/article37255267.ece/da4d1/AUTOCROP/h342/investors.JPG

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Government bond yields in the Euro zone fell on Monday after the head of the Federal reserve system Jerome Powell confirmed the prospects for a sustained increase in interest rates in the largest economy in the world.

The rise in risk appetite contributed to the progress in the U.S. and Mexican negotiations on the driven bilateral differences on the free trade agreement in North America lifted sentiments in relation to the lower rating of debt markets, including Italy, although trade was subdued due to the public holiday in the UK.

Speaking at a Symposium in Jackson hole on Friday, Powell defended to push the fed to raise rates as healthy for the economy and signalled we were Hiking is still going, despite the criticism of President Donald trump raising the cost of borrowing.

Assuming that the fed remains on the path of steady rate hikes, comments Powell was taken as an encouraging sign for investors.

“The Powell speech was interpreted as dovish, although I think that was some militant elements,” said Jan von Gerich, chief analyst at nordea in Helsinki. “There is nothing in his comments that would have changed in a material world”.

The fed, which started to tighten monetary policy in 2015, has twice raised prices this year and, as expected, in September and December.

With benchmark U.S. Treasury bonds rose slightly, bond yields of the Euro area also fell.

10-year bunds down 1.5 bps to 0.33 PC lower by more than two-week highs reached on Friday.

Other 10-year Treasury bonds in the single-currency bloc also fell to 1-2 points in the day, Italian bonds benefit from the pickup in risk appetite on global markets .

The gap between Italian and Spanish bonds last week increased to levels not seen since 2012 amid growing concerns about the Affairs of Italy against the establishment of a coalition government.

A flare-up last week between Rome and the European Commission for migrants who have renewed concerns about their relationship.

Analysts say that sales of the bonds in Italy on Thursday could be a key barometer of sentiment.

“The resumption of BTP auction after the summer break will serve as a key test this week, but should be soft significant coupons,” analysts at Commerzbank said in a note.

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