The expected – new increase – in interest rates from the European Central Bank.

This situation seems to have been noticed by central bankers of the Eurosystem. It is indicative that the head of the Central Bank of France, Francois Villeroy, pointed out in an interview published today that “investors betting on more rate hikes from the European Central Bank have ‘overreacted’ to strong data on the course of the US economy as and in the ECB announcements from last week. However, he estimated that interest rates will reach their peak in the summer, but avoided specifying when their de-escalation will begin.

According to the money futures market data, investors are “betting” that the ECB’s key (deposit acceptance) rate will reach 3.75% by September from 2.75% today. It is recalled that interest rates fluctuated at this level for the first time after the launch of the euro, i.e. in 2001. Last week Goldman Sachs, Barclays and Berenberg revised upwards their forecasts for how much the ECB interest rate will increase in 3.5%, while Deutsche Bank on Wednesday raised its forecast to 3.75%.

In the secondary market, in the Electronic Transaction System (HDAT) the volume of transactions was 88 million euros, of which 36 million euros related to purchase orders. The yield on the benchmark 10-year bond rose to 4.44% from 4.36% yesterday versus 2.51% for the German counterpart, bringing the spread to 1.93% from 1.84% yesterday.

In the foreign exchange market, the euro is moving lower against the dollar today as in the early afternoon the European currency was trading at 1.0621 dollars from the level of 1.0654 dollars that opened the market.

The indicative euro/dollar exchange rate announced by the ECB was 1.0664 dollars.