Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Interest Rates

News : Interest Rates

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 

PMI data brings wave of relief to fretful bond markets

share with twitter share with LinkedIn share with facebook
share via e-mail
0
02/21/2018 | 05:48pm CEST
Presentation of a new 2 Euro commemorative coin in honour of former German Chancellor Helmut Schmidt

LONDON (Reuters) - German bond yields hit two-week lows on Wednesday as weaker-than-expected business activity data from the euro area eased concern that ultra-easy monetary policy in the bloc could end sooner rather than later.

Long-term borrowing costs across the single-currency bloc were down across the board after preliminary purchasing managers index numbers from France and Germany, and closed the day about 1 to 3 basis points lower.

Across the euro zone, business growth slowed more than expected in February but firms remained at the most optimistic in at least 5-1/2 years, a survey showed.

IHS Markit's composite flash PMI for the euro zone, seen as a good guide to economic health, fell to 57.5, below forecasts in a Reuters poll that had predicted a more modest dip to 58.5 from January's final reading of 58.8.

.

German 10-year Bund yields fell 4 bps at one stage to a two-week low at 0.697 percent, before settling at 0.72 percent <DE10YT=RR>.

They moved further away from a more than two-year high hit recently at around 0.81 percent on speculation that robust economic growth would encourage the European Central Bank to pull back from its ultra-loose monetary policy stance soon.

"They (the PMI data) are still good, but I think people were getting over-excited about their strength beforehand," said Chris Scicluna, head of economic research at Daiwa Capital Markets in London.

"It might well be the case that people in the market were getting carried away about the strength of the recovery and what that means for the ECB."

A rise in euro zone bond yields and the value of the euro is a natural reaction to the bloc's strong economic performance and not an unwarranted market tightening, ECB policymaker Vitas Vasiliauskas said on Wednesday.

There was some underperformance by Italian debt, reflecting uncertainty as a March 4 election looms. The Italian/German 10-year bond yield gap hit 145 bps, close to its widest in around five weeks <IT10YT=RR>.

There was a firmer tone in other major bond markets. Japanese government bond yields fell in anticipation of strong demand at a 20-year-bond sale this week. [JP/]

U.S. Treasury yields <US2YT=RR> <US10YT=RR> steadied, after rising on Tuesday as markets absorbed the first chunk of this week's supply deluge.

Minutes from the U.S. Federal Reserve's January meeting are due later in the day and are in focus as investors assess the speed and pace of U.S. rate hikes this year.

"We expect the minutes to echo the more positive tone of the post-meeting statement on the economy and the FOMC's increased confidence in reaching its inflation target," analysts at UniCredit said in a note.

"This sets the stage for further rate hikes, with the next one likely to come in March."

For a graphic on Bund yield falling after PMI data, click: http://reut.rs/2ESjfrT

(Reporting by Dhara Ranasinghe; Editing by Toby Chopra)

By Dhara Ranasinghe

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news "Interest Rates"
02:00pSan Marino to decide on IMF loan, bond issue plan by end of 2018 - State Secretary
RE
09/17Correction to story on Russia raising interest rates
DJ
09/14Yellen Recommends Fed Formalize 'Lower-for-Longer' Guidance on Rates
DJ
09/14Russia Raises Interest Rates to Boost Ruble -- Update
DJ
09/14ECB can't ignore stability risk from low rates - Smets
RE
09/13Washington's Sanctions Push Hurts Russian Bonds -- Update
DJ
09/13Economists Split Over Path of Interest Rates in 2019
DJ
09/13Bank of England holds rates steady, sees more Brexit uncertainty
RE
09/13Bank of England to keep rates steady after August rise
RE
09/13Fed has room to raise interest rates for some time, Brainard says
RE
Latest news "Interest Rates"
Advertisement