FRANKFURT (dpa-AFX) – German bunds started trading in the middle of the week with price gains. On Wednesday morning, the trend-setting Euro-Bund-Future futures contract rose by 0.22 percent to 165.67 points. In return, the yield on ten-year government bonds fell to 0.23 percent. On Tuesday, it had risen to its highest level in just over three years at 0.27 percent.
Capital market interest rates are still driven by monetary policy. While the expectation of rising key interest rates is the main factor in the shorter maturities, long-term yields are boosted by the lower purchases of securities by central banks in many places. In the US, where the Fed will soon stop its securities purchases and is facing interest rate hikes, the ten-year yield is approaching the two percent mark.
In the US, Mary Daly, regional Fed president of San Francisco, confirmed that the Fed will probably initiate the turnaround in interest rates in March. If economic data does not come as a strong negative surprise, a rate hike is to be expected at the next Fed meeting in mid-March, Daly said.
From the ranks of the European Central Bank (ECB), which also seems to be heading towards a tighter line, the head of the French central bank relativized recent market reactions. The reactions to statements by ECB President Christine Lagarde were probably a little too strong, said Francois Villeroy de Galhau. In the money markets, up to two interest rate hikes were recently expected this year. By mid-2023, even more than four interest rate steps of 0.25 points each had been priced in, which seemed “extremely aggressive”, commented Dekabank./bgf/la/zb
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