The positive mood in the bond market remains, despite the pressures exerted within the European Central Bank to continue aggressive interest rate hikes.

The continuous decline in Greek bond yields, even though the country is in pre-election period, has driven Greece’s borrowing costs to a lower level than Italy’s. For example, today the yield of the Greek 10-year bond closed at 4.10% compared to 4.27% which was that of the corresponding Italian bond.

As for developments on the interest rate front, ECB Governing Council member Peter Kazimir said today that the European Central Bank may need to raise interest rates for a longer period of time than expected. Therefore, the evaluation of the results of this policy can be done for the first time in September.

“Based on today’s data, we should continue to raise interest rates for longer than expected,” Slovakia’s central bank chief said in a blog post. “Consequently, slowing the pace of interest rate increases to 25 basis points is a step that will allow us to gradually move higher over a longer period of time if this is necessary and justified by incoming data,” he added.

Markets are betting that the ECB’s key interest rate will rise a further 0.5% to 3.75% as, according to the central bank’s current forecasts, inflation is expected to fall below 3% in the final quarter of the year.

In the domestic market, and specifically in the Electronic Transaction System (EDAT) of the Bank of Greece, transactions of 104 million euros were recorded today, of which 24 million euros related to purchase orders.

The yield on the Greek 10-year bond stood at 4.10% versus 2.34% for the corresponding German bond, narrowing the margin to 1.76% from 1.82% at the end of the previous week.

In the foreign exchange market, the greenback is moving higher, with the European currency trading at $1.0955 from $1.1002 at the market open.