Eurozone Bond Yields Rise Amid ECB Speculations
Eurozone borrowing costs increased as German 10-year bond yields neared one-month highs, driven by speculation that the European Central Bank ended its easing cycle. Investors believe that ECB rates will remain stable, with only a 40% possibility of a cut by mid-2024. Meanwhile, U.S. economic resilience raises questions about a Federal Reserve rate cut.
Borrowing costs in the euro area saw an uptick on Friday, with German 10-year Bund yields nearing one-month highs. This move comes as traders speculate the European Central Bank has likely concluded its easing cycle.
Bond yields have been on an upward trend, reflecting investors' growing confidence after last week's ECB meeting, as rates are expected to remain stable for the coming months. According to Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, the possibility of a rate cut is still considered a risk.
Market sentiment was influenced further by a speech from ECB board member Isabel Schnabel, who highlighted the bank's focus on reducing debt holdings before considering liquidity injections. In the U.S., economic resilience and potential Federal Reserve actions are also impacting global bond markets.
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