Euro Zone Bonds Soar as ECB Holds Steady
Euro zone government bonds experienced a third consecutive daily rise. Investors showed decreased confidence in further rate cuts by the European Central Bank, which maintained rates at 2%. Meanwhile, optimism surrounding a U.S. trade deal led to a shift from safe-haven assets, resulting in increased bond yields.
- Country:
- United Kingdom
On Friday, Euro zone government bonds climbed for the third consecutive day, as investors became more skeptical about imminent interest rate cuts by the European Central Bank (ECB). This shift followed the ECB's decision to maintain the current rate of 2%, signaling a tempered concern over future economic slowdowns and inflation.
The response was a swift surge in bond yields. German Schatz yields, with a notable increase of nearly 12 basis points on Thursday—their largest leap since May—registered an additional rise of 2.3 basis points, pushing them to 1.934%.
Meanwhile, benchmark 10-year German bond yields increased by 3.3 basis points to reach 2.726%, and Italian yields rose nearly 5 basis points to 3.613%, widening the spread between the two to 88.4 basis points. Traders speculated on future ECB rate cuts, estimating a 30% likelihood of rates falling below 2% by year's end.
(With inputs from agencies.)
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