Sunday, 24 October 2021

Euro zone bond yields steady but inflation jitters linger

Euro bond

LONDON: Borrowing costs across the euro area were mostly steady, although expectations for higher inflation and a step towards tighter monetary policies from major central banks continued to weigh on sentiment across world bond markets.

In the United States, where data on Wednesday showed consumer prices rose more than expected in January, interest-rate sensitive two-year Treasury yields were set to end the week up 15 basis points – the biggest weekly rise in almost a year.

As investors bet the US Federal Reserve could deliver more rate hikes than anticipated this year, bond yields have risen even as equity markets this week appeared to shake off the strong inflation numbers.

“It has been a US story this week, with the CPI data prompting markets to price in more rate hikes from the Fed, which makes sense to us,” said Mizuho rates strategist Antoine Bouvet.

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