Eurozone government debt yields fall ahead of US economic data

Jan 26 (Reuters) – Eurozone government bond yields edged ahead of U.S. GDP data on Thursday and investors accepted the fact in the absence of more hawkish signals from the European Central Bank at next week’s meeting.

According to analysts, ECB President Christine Lagarde may admit that the rate forecast depends on economic data, and will not reiterate that market expectations regarding the final interest rate are too low.

Fabio Panetta, a member of the ECB’s board of governors, said there is reason to be cautiously optimistic, especially about inflation, as the European Central Bank should not promise any further rate hikes after February.

However, Bundesbank President Joachim Nagel said on Wednesday he would not be surprised if the ECB needed to raise interest rates again after two expected moves in February and March.

The yield on 10-year German government bonds – a benchmark for the currency block – fell 0.5 basis points to 2.15%. After reaching a peak of 2.569% since July 2011, it fell to a one-month low of 1.967% in mid-January.

The yield on the 10-year Italian government bond fell 1 bp. 4.08%, and the median between the 10-year Italian bond and German bond yields—an indicator of the risk premium for bonds from eurozone countries with high indebtedness—was 189 basis points.

The original message code in English is available at: (Stefano Rebaudo)

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