Below the “psychological” limit of 4% – specifically at 3.92– the Greek 10-year bond yield fell today during the day.

The Greek bond market, like most European ones, is recovering after the continuous decline of the last few weeks, as there is optimism among investors and they expect that the European Central Bank (ECB) will eventually be the first among the major central banks to “drags the dance” of lowering interest rates.

The statements of European officials and central bankers who participate in the ECB’s Board of Directors move in this direction. At the same time, the money futures market has already started to discount interest rate cuts not only from the ECB, but also from the FED and the Bank of England in the second half of 2024.

Specifically, markets are now pricing in an 80% probability of a 0.25% interest rate cut by the ECB in July, while the probability reaches certainty (100%) when the time horizon extends to July.

These expectations are also based on the course of key indicators of the economy.

In particular, inflation shows clear signs of retreat, while the recovery in the Eurozone and the US appears to have slowed down.

Data on Tuesday showed euro zone inflation fell more than expected to a two-year low in October, while the economy shrank in the third quarter, raising the risk of a recession at the end of the year.

US labor market data released today (jobs disappointed analysts) backs that up.

Nevertheless, ECB President Christine Lagant last week argued that any talk of lowering interest rates is premature.

In the secondary bond market today, and more specifically in the Electronic Transaction System (HDAT) of the Bank of Greece, transactions of 34 million euros were recorded, of which 24 million euros related to purchase orders.

The yield on the Greek 10-year bond stood at 4.04%, up from 4.09% yesterday, compared to 2.64% for the corresponding German bond, bringing the spread to 1.4%.

In the foreign exchange market, the euro is moving upwards against the dollar, with the result that in the afternoon the European currency trades at $1.0725 from the level of $1.0694 that opened the market.