The ECB's press conference on Thursday was decisively more "hawkish" compared with December, with no push back against what the short end of the yield curve is pricing for interest rate rises, Zahn said. "This pushes official decisions to the March ECB meeting with the reforecasting of economic data."
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TD Securities has exited its long 10-year Bund trade after Thursday's selloff.
The investment bank entered the trade at a yield level of 0%, targeting -0.15% and setting the exit level at 0.15%. Thursday's almost 12 basis point selloff in 10-year Bunds caused TD's trade to hit the stop level.
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The share of negative rates in the global bond universe has fallen to 12% from 30%, its lowest level since 2018, and should continue to fall, said Nicolas Forest, global head of fixed income at Candriam. "This is the end of the era of negative rates," he said and sees the decline of negative-yielding bonds as one of the three global trends emerging.
This, coupled with volatility in credit spreads amid monetary policy normalization, signal a return to fundamentals, he added.
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French presidential elections in April, the normalization of the ECB's policy and the deterioration of fundamentals could justify the relative fragility of French government bonds, said Societe Generale's rates strategist team.
Political stress in France around the April presidential elections could widen the 10-year OAT-Bund spread to 55 basis points, but the odds of a non-market friendly candidate winning remain low, they said. Therefore, they consider volatility similar to that observed around the 2017 elections unlikely.
Societe Generale's year-end target for the 10-year OAT-Bund yield spread is 45-50 basis points; the current level is 44 basis points, according to Tradeweb.
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The yield on the 10-year gilt continued to trade higher after the BOE lifted its bank rate.
Market watchers interpreted the news that four out of the nine Monetary Policy Committee members voted for a larger 50 basis-point rise to tame soaring inflation as more aggressive than expected.
Commodities:
Brent crude set a fresh multi-year high on OPEC+ supply tightness and as a winter storm swept across the U.S., threatening to disrupt oil production.
OPEC+ nations seem to be falling further behind on their pledges to increase oil output, said Helge Andre Martinsen, senior oil analyst at DNB Market. "Production capacity issues are increasing."
Copper prices gained slightly as the dollar and LME inventories of the metal fell. The metal, on course for a 3.9% weekly gain, has traded in a narrow range for several months, after hitting a high last year.
While concerns about global demand have emerged, analysts said demand is strong enough to keep prices supported while supply is tight. LME approved inventories of the metal are hovering close to their lowest level in a year, with stocks standing at around 82,000 tons, down from 254,000 tons in August.
DOW JONES NEWSPLUS
EMEA HEADLINES
German Manufacturing Orders Rose in December, Beating Forecasts
German manufacturing orders increased in December, beating expectations amid continuing supply-chain disruptions.
Manufacturing orders rose 2.8% on month in December in adjusted terms, following a revised 3.6% increase in November, according to data from federal statistics office Destatis released Friday.
TomTom Sees Flat 2022 Revenue as Supply Chain Issues Continue; Shares Fall
Shares in TomTom NV fell on Friday after the company said that it expects to report flat revenue for the year ahead as supply chain constraints in the automotive industry continue to hurt its performance.
Shares at 0903 GMT were down EUR1.13, or 14%, at EUR7.03.
Sanofi Posts Higher 4Q Net Profit
Sanofi SA said Friday that net profit rose in the fourth quarter, and that it expects its business earnings per share to grow this year.
The French pharmaceutical company said that net profit came in at 1.13 billion euros ($1.29 billion) for the period, up from EUR1.07 billion for the same period last year.
Eurozone Retail Sales Declined in December Amid Rise in Coronavirus Infections
Eurozone retail sales fell in December due to a rise in Covid-19 cases across Europe with the spread of the Omicron variant, the European Union's statistics agency Eurostat said Friday.
The volume of retail sales declined 3.0% in December compared with the previous month, after a 1.0% rise in November, Eurostat said. Economists polled by The Wall Street Journal had forecast a smaller 0.5% decline for December.
Intesa Sanpaolo to Distribute $25 Bln by 2025 Under New Plan
Intesa Sanpaolo SpA will target higher earnings and profitability and plans to return 22 billion euros ($25.16 billion) to shareholders between 2021 and 2025 as part of its new business plan, the bank said Friday as it reported a swing to a fourth-quarter profit.
Italy's largest bank by assets said it expects its net profit to grow to EUR6.5 billion in 2025. It posted a EUR4.19 billion net profit in 2021.
Vinci 2021 Profit, Revenue Increased; Raises Dividend Proposal
Vinci SA on Friday posted higher net profit for 2021 while revenue exceeded 2019 pre-pandemic levels, with the group expecting net income this year to be higher than in 2019.
The French construction and infrastructure company said net profit rose to 2.60 billion euros ($2.97 billion) from EUR1.24 billion in 2020.
Enel Books Higher 2021 Earnings as Revenue Rises Sharply
Enel SpA said late Thursday that revenue increased in 2021 thanks to increases across business divisions, and that earnings rose at a more modest rate.
According to preliminary results, the Rome-based energy company made earnings before interest, taxes, depreciation and amortization of 17.6 billion euros ($20.1 billion), an increase of 4.1% compared with 2020. Adjusted for one-offs such as corporate reorganization and pandemic-related costs, ordinary Ebitda came in at EUR19.2 billion, including a gain made from the sale of a stake in Open Fiber SpA last year, Enel said.
Ukraine Crisis Puts Germany's Cautious Leader on the Spot
BERLIN-Olaf Scholz, the new leader of Germany, heads for Washington on Sunday, facing pressure to embrace U.S.-led efforts to counter Moscow despite Berlin's reliance on Russian energy supplies and misgivings in parts of Europe about America's push to bring Ukraine into the trans-Atlantic fold.
Like past German chancellors, Mr. Scholz had tried to balance his country's membership of the Western alliance with its close ties to Russia. But as Moscow has become more aggressive, Mr. Scholz's effort to carve a middle path has put him in an international crossfire.
Vladimir Putin, Xi Jinping Put on United Front Amid Standoff With West
Chinese leader Xi Jinping and Russian President Vladimir Putin met in Beijing in a summit just ahead of the Winter Games, showcasing a united front amid a tense standoff with the West over the buildup of Russian troops near Ukraine.
The summit marks the first face-to-face meeting with another foreign leader in more than two years for Mr. Xi, who has remained in China for the entirety of the Covid-19 pandemic. Mr. Putin opened the meeting on Friday afternoon by saying he had arrived in Beijing with a new contract to supply 10 billion cubic meters of natural gas per year to China.
U.S. Says Russia Is Planning to Fabricate a Pretext to Invade Ukraine
WASHINGTON-Russia is planning to fabricate a pretext for an invasion of Ukraine by releasing a staged video depicting attacks by Kyiv military forces, U.S. officials said Thursday, citing newly declassified intelligence.
U.S. officials said they went public with the information to expose Russian tactics in an attempt to avert a conflict inside Ukraine, the latest in a series of similar moves in recent weeks.
Footfall at U.K. Stores Improved Slightly in January
Footfall at British retail stores improved slightly on a monthly basis in January, but continued to be far behind pre-pandemic levels, according to the latest report by the British Retail Consortium and Sensormatic Solutions.
The country's footfall in stores fell by 17.1% in January on a two-year basis, and rose by 1.5% from December 2021, the report said.
U.K. Property Market Sees Busiest Ever January
The U.K. property market has recorded its busiest ever January, with buyer demand climbing 24% above pre-coronavirus levels, according to new data from Rightmove PLC.
Buyer inquiries about homes for sale rose 16% on-year, 24% compared with January 2020 and 41% compared with 2019, the online property portal said. The rental market has also seen a strong increase, as tenant demand for the month rose 17% compared with last January and 33% compared with January 2020.
GLOBAL NEWS
Omicron Variant Looms Over January Jobs Report
The January jobs report will reveal the extent to which the Omicron variant of Covid-19 dented U.S. employment last month.
Record Run for Zero-Interest Convertible Bonds Hits a Wall
Over the past two years, investor demand for convertible bonds got so hot that bankers did something unprecedented: They sold nearly $57 billion of bonds that pay no interest, according to data compiled by JPMorgan Chase & Co.
Investors gobbled up convertible bonds with zero coupon from companies including Airbnb, SoFi, Snap, Ford, DraftKings, Twitter, Shake Shack, Spotify and Dish Network. They were essentially lending the companies money at 0% interest, hoping shares would rise enough that they could convert their bonds into stock. But with higher interest rates coming, the reign of the zero-coupon convertible bond is likely coming to an end in 2022, bankers say.
U.S. Says Russia Is Planning to Fabricate a Pretext to Invade Ukraine
(MORE TO FOLLOW) Dow Jones Newswires
02-04-22 0613ET
