Euro zone yields nudge at three-week lows ahead of ECB
Updates throughout
By Amanda Cooper and Alun John
LONDON, July 17 (Reuters) -Euro zone yields steadied on Wednesday, heading for their largest weekly decline in a month, a day before a European Central Bank meeting that could offer a signal of where interest rates may go over the rest of this year.
The consensus among market-watchers is there will be no change to ECB monetary policy and euro zone rates will stay at 3.75%, so the focus will be on what the central banks flags about the outlook for the September meeting.
German 10-year bond yields DE10YT=RR, the benchmark for the euro zone, were unchanged at 2.432%, having touched their lowest in three weeks earlier in the day. Bunds are also heading for a decline of 6 bps this week, the largest weekly fall since mid-June.
Italian 10-year yields IT10YT=RR, meanwhile, traded 1 bp higher at 3.72%, near a three-month low, leaving their premium over German Bunds DE10IT10=RR 5.5 bps wider at 127.9 bps.
Signs that inflation is slowing around the world, alongside some nervousness in European assets due to geopolitics have helped euro zone bond prices to rally, which has pushed yields lower.
The ECB meets on Thursday and is widely expected to hold interest rates steady, while the outlook for future rate cuts will depend on how the economy evolves.
Inflation has dropped since the ECB last met, but has failed to subside in the dominant services sector. Some policymakers said they felt cornered into June's rate cut and are in no hurry to flag what's next.
ECB President Christine Lagarde at the last meeting indicated policymakers would aim to loosen monetary policy gradually, which Martin Wolburg, senior economist at Generali Investments, said indicated any action on Thursday was "extremely unlikely".
He cited stubbornly high services inflation and a pickup in wage growth as reasons the ECB Governing Council will act with a caution.
"From ECB communication, we concluded that further easing measures will need to be checked with the updated macro outlook that is next due by September. We expect Mrs Lagarde to convey a dovish wait-and-see stance at tomorrow’s press conference and look for the next rate cut by September," Wolburg added.
The swaps market shows traders expect at least one more rate cut this year from the ECB, with an 80% chance of a cut in September and a reasonable chance of another reduction before the end of the year. 0#ECBWATCH
Against that backdrop, the German yield curve - or gap between shorter- and longer-dated bond yields - has been steadily flattening for the last three months.
Two-year yields DE2YT=RR, which are more sensitive to shifts in expectations for rates, are just 35 bps above 10-year yields, up from around 44 bps a month ago and versus 90 bps a year ago. DE2DE10=RR
Two-year Schatz yields were last up 2 bps at 2.786%.
Editing by Arun Koyyur and Philippa Fletcher
Mga Kaugnay na Asset
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
