Bonds: Bank issuance, ECB speakers push yields higher
(ShareCast News) - These were the movements in some of the most widely-followed 10-year sovereign bond yields:
US: 2.21% (+5bp)
UK: 1.07% (+5bp)
Germany: 0.20% (+5bp)
France: 0.95% (+6bp)
Spain: 1.68% (+1bp)
Italy: 2.28% (+2bp)
Portugal: 3.81% (-1bp)
Japan: 0.01% (+0bp)
Greece: 6.69% (-10bp)
Yields were higher across the board on Wednesday, with some traders referencing heavy issuance by banks and upbeat remarks from rate-setters on both side of the Atlantic, especially from the European Central Bank.
A total of $10bn of investment grade debt was issued by lenders.
One trader referenced ECB chief economist Peter Praet's remark that "personally" he no longer saw downside risks to activity as one of the triggers behind the rise in yields. However, according to Reuters Praet also said that any eventual move to tighten policy needs to be done very cautiously and only once the ECB was certain that the rise in inflation was self-sustaining.
In parallel, Boston Fed president Eric Rosengren indicated that in his opinion a move to begin shrinking the central bank's balance sheet need not impact on the pace of rate hikes.
Speaking later in the day, Fed vice chairman Stanley Fischer said financial markets' benign reaction to the 50 basis points of policy tightening since December pointed to few negative spillovers to foreign economies from further rate rises.
However, the divergence in policies between the Fed and other central banks was an "ongoing concern".
The data calendar was very light on Wednesday, with the Fed's Beige book the only significant release.
Growth in the twelve Fed districts was described in equal parts as either "modest" or "moderate" with the labour market said to still be "tight, and employers in most districts had more difficulty filling low-skilled positions".