Eurozone government bond yields fell today as data showing a stalled recovery in the euro zone unnerved investors, who in turn turned to safe-haven bonds.

The so-called precursor indicators (PMI) in France, which is affected by the strikes, but also in Germany showed that in June the growth momentum is stopped.

It is indicative that the yield curve in Germany is already inverted, as short-term bond yields are higher than long-term ones, a development which is usually the “harbinger” of recession. Specifically, the yield of the 2-year bond is 3.14% compared to 2.33% of the 10-year bond.

S&P warned that the chances of a mild recession in the eurozone economy – its GDP fell 0.1% in the first quarter of 2023 as well as in the fourth quarter of 2022 – would continue in the second quarter.

At the same time, the ECB appears determined to proceed with another interest rate increase in July.

In fact, the Spanish central banker Pablo Hernández de Cos clearly stated that the ECB will proceed in July with a new increase in its key interest rates with the aim of fighting inflation in the Eurozone.

It is recalled that since the summer of 2022 the ECB has proceeded with 8 consecutive increases in its main interest rates, having brought the interest rate of the main refinancing operations to 4%.

In the secondary bond market today, and more specifically in the Electronic Transaction System (HDAT) of the Bank of Greece, 177 million euros were recorded, of which 137 million euros related to purchase orders.

The yield on the Greek 10-year bond fell to 3.64% from 3.75% that closed yesterday, versus 2.34% for the corresponding German bond, bringing the spread to 1.30%.

In the foreign exchange market, the euro moves down against the dollar, with the result that in the afternoon the European currency trades at $1.0893 from the level of $1.0897, which opened the market.