EKT limits liquidity in banks – Negative reaction to bonds

European bonds were negatively affected by today’s “message from the ECB” on interest rates. Both the head of the ECB Christine Lagarde, as well as other central bankers involved in the decision-making process, have hinted that the required increase in interest rates to reduce inflation will ultimately hurt growth. Despite this, analysts estimate that the new interest rate increase in December will be smaller than the previous two 0.75% hikes.

At the same time, interest is beginning to shift to the process of reducing the ECB’s balance sheet. Already today he announced that according to the repayment program of the TLTRO funds, the banks of the eurozone they are going to repay 296 billion euros. According to Reuters, analysts expected the ECB to request repayment of loans amounting to half a trillion. EUR during the first voluntary repayment period of targeted long-term refinancing operations.

It is noted that the four systemic banks, Ethniki, Piraeus, Eurobank and Alpha Bank, have received from the ECB approximately 51 billion euros. In the secondary bond market, and specifically in HDAT, transactions of 112 million euros were recorded today, of which 46 million euros related to purchase orders. The yield on the 10-year bond fell to 4.32% from 4.40% yesterday versus 2.00% of the corresponding German bond, bringing the spread to 2.32%.

In the foreign exchange market, the euro is moving lower against the dollar, as the European currency was traded in the early afternoon at $1.0357 from the level of $1.0364 that opened the market.

The indicative euro/dollar exchange rate announced by the European Central Bank was 1.0366 dollars.

RES-EMP

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