Home News Business Eurozone bond rates fall after growth; the focus is supply

Eurozone bond rates fall after growth; the focus is supply

Eurozone bond rates fall after growth;  the focus is supply

News Tech: Euro zone bond yields fell on Wednesday after gaining earlier in the week as the focus continued on bond issuance. Yields soar after Federal Reserve Chairman Jerome Powell and other policymakers spooked bond investors by saying central banks must act ‘quickly’ to tackle high inflation rose. That has led the market to bet that the Fed will likely hike rates by 50 basis points (bps) instead of 25 basis points (bps) at one or more of his meetings for the rest of the year, with Treasury yields and Both eurozone bond yields were pushed higher.

A series of syndicated bond sales began this week in which borrowers sell bonds directly to end investors through investment banks. On Wednesday, Italy received €10.7bn of demand, borrowing his €5bn from his new 8-year floating rate bond. Austria has issued her 4.5 billion euro worth of her 10-year bonds and she was in demand for 26 billion euros, according to the lead underwriter. These follow Tuesday’s sale of his €12 billion debt by the European Union.

However, the bond market calmed down on Wednesday, and at 15:25 GMT, Block’s benchmark German 10-year yield fell 1.5 basis points to 0.49% on the day. Yields on most other 10-year bonds stayed within 1 basis point. The 2-year yield hit its highest level since 2015, turning positive to less than 25 basis points, while it rose 14 basis points on Monday and Tuesday to its highest level since 2018. “On the fixed income side alone, I think we are starting to see an end to the supply side pressure that has been mounting as investors prepare for new deals to hit the market this week,” said Antoine Bouvet, senior rate strategist at ING.

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Huge bond sales tend to put pressure on outstanding bonds as investors create room for new supply. Bond yields move inversely with prices. Germany’s financial services agency also said its bond issuance schedule for the second quarter remains unchanged despite increased defense spending following Russia’s invasion of Ukraine and budget cuts due to rising energy prices. Financial Services Agency chief Tamo Diemer also said the agency did not know how much German government bonds Russia holds, but speculated that it had been held by Russia’s central bank in the past.