Debt: interest rates are on the rise, compared to France above 2%

Debt: interest rates are on the rise, compared to France above 2%

These strong increases are in line with a strong message from the European Central Bank and accelerating inflation in the US.

Interest rates on government bonds continued to rise on Monday, with the French 10-year yield exceeding 2%, a level not seen since 2014, under pressure from inflation that raised fears of severe monetary tightening by central banks. “It’s kind of a bloodbathIn a sovereign debt market where investors are dumping their bonds, notes AurĂ©lien Buffaut, director of bond management at Meeaschaert Amilton AM.

Yields soared following a strong message from the European Central Bank on Thursday and an acceleration in US inflation on Friday, leaving the market to fear a stronger-than-expected monetary tightening. The Frankfurt Monetary Corporation confirmed last week that it will end its bond purchases in early July in the markets and that it will raise its prices in July by a quarter of a point, as expected, without ruling out a larger increase in September. Inflation expectations persist or deteriorate.

see also – In the face of “junk” inflation, the European Central Bank begins to raise interest rates historically

Interest rate hike ‘harder than expected’

The market believes that the rate hike will be more difficult than expectedAurĂ©lien Buffaut explains. In the Eurozone, the yield on the Bund (Germany’s 10-year borrowing rate, which indicates) was 1.61%, a level not seen since 2014, just like France at 2.22% around 2:50 pm. GMT. “The end of asset purchases from the European Central Bank will put pressure on the debts of eurozone countries, especially peripheral countries such as Italy.Nicholas Forrest, director of bond management at Candriam, notes in an interview with AFP.

The yield on the Italian loan exceeded 4%, a level dating back to the end of 2013.Particularly at the level of interest rate differentials, it is advisable to be careful in the eurozone: the difference between the 10-year rates in Germany and Italy was 2.40% this morning, the highest level since May 2020, during the first. covid waveAlexandre Paradis, Head of Market Analysis at IG France wrote. gap “It is still far from the stress levels reached during the debt crisis in the eurozone as this gap exceeded 5% in 2011 and 2012“, the expert gets angry. The possibility of tightening monetary policy of the US central bank at the end of its meeting, which takes place on Tuesday and Wednesday, has also raised US interest rates to 10 years to their highest level for 11 years.

see also The Organization for Economic Co-operation and Development has warned that the war in Ukraine will affect global growth and push inflation above 8%.

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