SCZONE showcases investment opportunities to eight Japanese companies    Egypt urges Israel to accept Gaza deal amid intensifying fighting    Egypt, ADIB explore strategic partnership in digital healthcare, investment    Egypt's PM meets Tokyo governor, witnesses signing of education agreements    Egypt welcomes international efforts for peace in Ukraine    Al-Sisi, Macron reaffirm strategic partnership, coordinate on Gaza crisis    Egypt's Sisi, France's Macron discuss Gaza ceasefire efforts in phone call    Contact Reports Strong 1H-2025 on Financing, Insurance Gains    Egypt, India's BDR Group in talks to establish biologics, cancer drug facility    AUC graduates first cohort of film industry business certificate    Egypt to tighten waste rules, cut rice straw fees to curb pollution    Indian tourist arrivals to Egypt jump 18.8% in H1-2025: ministry data    Egyptian pound down vs. US dollar at Monday's close – CBE    Egypt prepares unified stance ahead of COP30 in Brazil    Egypt recovers collection of ancient artefacts from Netherlands    Egypt harvests 315,000 cubic metres of rainwater in Sinai as part of flash flood protection measures    Egypt, Namibia explore closer pharmaceutical cooperation    Fitch Ratings: ASEAN Islamic finance set to surpass $1t by 2026-end    Renowned Egyptian novelist Sonallah Ibrahim dies at 88    Egyptian, Ugandan Presidents open business forum to boost trade    Al-Sisi says any party thinking Egypt will neglect water rights is 'completely mistaken'    Egypt's Sisi warns against unilateral Nile measures, reaffirms Egypt's water security stance    Egypt's Sisi, Uganda's Museveni discuss boosting ties    Egypt, Huawei explore healthcare digital transformation cooperation    Egypt's Sisi, Sudan's Idris discuss strategic ties, stability    Egypt to inaugurate Grand Egyptian Museum on 1 November    Greco-Roman rock-cut tombs unearthed in Egypt's Aswan    Egypt reveals heritage e-training portal    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Global borrowing costs spike as markets take Draghi comments at face value
Published in Daily News Egypt on 30 - 06 - 2017

Germany's benchmark 10-year bond yield has made its biggest weekly jump since December 2015. Borrowing costs across the eurozone and beyond also rose as investors prepare for an end to the period of easy monetary policy.In Germany, 10-year Bund (sovereign) yields fell 1.5 basis points to 0.44 percent, on Friday, but remain 19 basis points up over the week and saw their biggest weekly jump since December 2015.
Market fears of tighter monetary policy also weakened the dollar and pushed yields on 10-year US Treasuries up 14 basis points in the past week to 2.28 percent – near a one-month high.
The 10-year bond yields in France and the UK have risen at least 20 basis points over the past week. Italian yields were set for their biggest weekly jump since March, increasing the borrowing costs of the highly indebted eurozone country.
The main driver of the bond sell-off was comments by ECB chief Mario Draghi (main photo) earlier this week that the eurozone was headed towards "reflation," interpreted to mean that Draghi was planning to taper his €60bn-per-month bond-buying program.
Ending Quantantive Easing?
The ECB, Bank of Japan and the US Federal Reserve bought large amounts of bonds to shore up their economies after the financial crisis, driving down bond yields to extreme lows, which is known as Quantantive Easing.
The Fed stopped buying bonds in 2014 and has raised short-term rates. Dragi's recent remarks suggest more central banks might be following suit.
Money markets price in around an 80 percent chance that the ECB will hike rates over the next year, up from 20 percent earlier this month, the Financial Times reported.
Yield rises across the board
Momentum for monetary tightening by the ECB is gathering pace, with the European Commission's economic sentiment indicator hitting its highest levels since August 2007, possibly a signal that May's weak inflation could be a blip.
Inflation – which is targeted by the European Central Bank (ECB) at 2 percent – fell to 1.3 percent in June from 1.4 percent a month earlier, bringing some comfort to bond markets and allowing yields to fall away from their earlier highs.
"It certainty feels like a sentiment change out there. The trigger may have been Draghi's comments, but the fact is that even after clarification yields have continued to rise and that suggests there is more at play," Nordea chief strategist Jan von Gerich told the news agency Reuters.
"People are starting to come to the view that tapering will happen soon and they have to position for that."
Don't believe the hype
Bloomberg news agency suggested on Friday that nothing fundamental has happened on the economic data front or politically.
"We've just been talked at by central bankers getting in their ‘we warned you' excuses on overpriced assets... [but] clouds hanging over the economic and inflation outlook mean there's no realistic prospect of a change in monetary policy."
jbh/tko (Reuters)


Clic here to read the story from its source.