Rising bond prices – Below 2% margin

Bond prices are also moving upwards todayas a result their yields to be compressed furtheras the market has already discounted the ECB’s 0.5% interest rate hike in February.

The minutes from the meeting of the Governing Council of the ECB in December – when it was decided to increase interest rates by 0.5% -, which were made public today, confirm the main message sent by the head of the Bank, Christine Lagarde, that the ECB is far from far from completing the rate hike cycle.

As evident from the December Minutes “the stance of monetary policy needs to be tightened decisively” while “the current configuration of interest rates and expectations embedded in market pricing has not been sufficiently restrictive to bring inflation back to target in time”. Several ECB members favored a rate hike of 75 basis points (instead of the decided 50 basis points) and also preferred a rapid pace to taper reinvestment under the Asset Purchase Program (APP).

After that, financial analysts estimate that another 50 basis point interest rate hike at the February meeting, about two weeks from today, appears to be a “foregone conclusion.” Likewise, a further 50 basis point hike at the March meeting looks even more likely. very likely. In conclusion, it is estimated that as long as inflation remains stubbornly high and forecasts for structural inflation remain above 2%, the ECB will continue to raise interest rates. Consequently at this stage it is difficult to predict with relative certainty when the ECB will start to cut interest rates. Thus, current market expectations of ECB rate cuts in 2024 appear to be premature.

In HDAT, transactions of 105 million euros were recorded today, of which 46 million euros related to purchase orders.

THE yield of the Greek 10-year bond it stood at 4.03%, from 4.05% that closed yesterday, against 2.05% of the corresponding German title, with the result that the margin fell below 2% and more specifically at 1.98%.

In the foreign exchange market, the euro is moving higher against the dollar today, as the European currency was trading at $1.0805 in the early afternoon from the $1.0798 level at which the market opened.

The indicative euro/dollar exchange rate announced by the European Central Bank stood at $1.0815.

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