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Italy

UPDATE 1-German Bund yields rose to new highs since March 2020 | Instant News


* Italian 10-year highest yield since September 2020

* Bunds are closely monitored for new trends – UniCredit (Recast, add details, update prices)

May 3 (Reuters) – Germany’s bond yield benchmark climbed to its highest since March 2020 and Italian yields to their highest since September on Monday as analysts watch to see if last month’s eurozone government bond selloff has more room to play .

German bonds underperformed in the US Treasury and yields, which move inversely to prices, rose in April.

The selloff picked up last Thursday as German inflation rose further above the European Central Bank’s target, and US data showed the pace of economic growth in the first quarter.

Expectations of higher growth and a resurgence in inflation, first sparked by massive fiscal stimulus in the United States, have pushed government borrowing costs on both sides of the Atlantic higher this year.

Investors are looking for signs that suggest the central bank may start easing the extraordinary monetary stimulus, which is still holding back bond yields.

After calming down on Friday, when month-end buying supported bond prices, the yield on the German 10-year Bund, the benchmark for the region, rose by more than 3 basis points to a new high since March 2020 at -0.162% on Monday.

Italy’s 10-year yield hit a new high since September 2020 at 0.903%.

Arne Petimezas, analyst at AFS Group in Amsterdam, said that while he did not see any specific driver behind Monday’s move, it was in line with expectations.

“Recovery is increasing, vaccinations are accelerating, reopening is imminent,” he said.

Some investors ended April expecting further increases in euro area government bond yields as vaccinations accelerated and UniCredit analysts previously said the Bunds would be monitored “very closely” for any indication of whether last week’s sell-off might be the start of a new trend.

There are also concerns about market jitters ahead of the European Central Bank’s June meeting, where it should review March’s decision to speed up pandemic emergency bond purchases.

The ECB could start phasing out emergency measures as the pace of coronavirus vaccination reaches critical levels and the economy accelerates, said Vice President Luis de Guindos.

Monday’s rise in yields came with German retail sales posting an unexpected spike in March as the easing of some lockdown measures boosted buying. nL8N2MQ0V8]

But April eurozone manufacturing activity data came in slightly below preliminary estimates, although still at the highest level since the survey began in 1997.

Moves also took place in a quiet trading session given the public holidays in London, as well as Japan and China, which could reduce market liquidity and increase movement.

Focus shifts to the United States on Monday, where US ISM manufacturing activity figures scheduled for 1400 GMT are expected to show some growth in April. (Reporting by Yoruk Bahceli; Editing by Subhranshu Sahu and Mark Heinrich)

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Italy

Greece, Italy, Spain Need European Tourism Dollars | Instant News


This is America’s Dream for Europe’s troubled tourism sector. On Sunday, European Commission President Ursula von der Leyen told the New York Times that American tourists have been fully vaccinated can visit that block this summer.

But the US contributes a fraction of tourists to tourist-dependent countries such as Greece, Spain, Portugal and Italy. In order to prevent another lost holiday season for these countries, intra-European travel must be fully reopened. And it still looks weird.

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Germany

UPDATE 2-German 10-year results are set for the biggest weekly gain since February | Instant News


By Elizabeth Howcroft, Yoruk Bahceli

* Euro area yields stabilized after Thursday’s sharp sell-off

* German yields are set for their biggest weekly gain in 2 months

* Germany will hold investor calls before issuing green – memo (Adding details, updating price)

LONDON, April 30 (Reuters) – Eurozone government bonds were steady on Friday after a sharp selloff in the previous session but German 10-year yields are still on track for their biggest weekly gain in two months.

Investors are watching for signs that the economic recovery from COVID-19 is gathering enough speed for the central bank to start easing its extraordinary monetary stimulus, even though the US Federal Reserve and European Central Bank say that has not yet happened.

The main benchmark yield hit multi-month highs on Thursday after US economic growth and German inflation data came in higher than expected, strengthening the case for a pullback.

Preliminary data on Friday showed the eurozone economy shrank less than expected in the first three months of this year, while headline inflation picked up as expected.

At 1447 GMT, the German 10-year yield, the benchmark for the region, was down nearly two basis points at -0.21%, after touching its highest level in more than a year on Thursday at -0.177%.

Italy’s 10-year yields also fell one basis point to 0.87%, compared with Thursday’s 7-month high of 0.895%.

Lyn Graham-Taylor, interest rate strategist at Rabobank, said she does not expect German Bund yields to move significantly higher, and expects the gap between US and eurozone yields to widen as the US economy recovers.

But some investors are positioning for further Bund sell-offs as vaccination launches accelerate in the European Union.

“The direction of EUR interest rates is beyond doubt,” wrote the ING strategist, also citing a jump in European economic confidence indicators and an inflation survey.

However they still have doubts about the sustainability of faster inflation in the eurozone, which is expected to be temporary.

Elsewhere, Germany announced an investor meeting for its upcoming green bond issuance, according to a memo seen by Reuters.

After last year issuing five- and 10-year green bonds – securities that finance projects that benefit the environment – Germany’s financial agency plans to issue a 30-year syndicate in May.

The financial agency will hold bilateral calls starting next Tuesday, followed by a global investor call on Thursday, the memo said.

Germany is building a green yield curve, which other countries and companies can then use as a reference point for their own sales. (Reporting by Elizabeth Howcroft and Yoruk Bahceli; Editing by Pravin Char, Kirsten Donovan)

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Germany

German Inflation Breaks 2% for the First Time Since 2019 | Instant News


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Germany’s inflation rate has risen above 2% for the first time in two years, mainly driven by energy costs.

Consumer prices also increased sharply in Spain – by 1.9% from a year earlier – and are expected to increase in France and Italy. The euro area report due for release on Friday is set to show the interest rate stands at 1.5%, the highest since 2019.

While some analysts predict a new era of higher inflation following the pandemic, fueled by pent-up demand and abundant savings driven by massive fiscal support for households, the European Central Bank predicts any hikes will be temporary.

Have noted that this year’s price increases largely reflect the end of one-time impacts, such as lower oil prices and temporary tax cuts. He also said that changes in the composition of the shopping cart used to calculate consumer price growth are distorting the underlying trend.

The agency – which has failed to hit its inflation target of below, but close to .2% over the years – reckons that price pressures will remain muted in the medium term amid an economic downturn and job uncertainty. Core inflation in the 19 countries is still running below 1%.

– With the help of Harumi Ichikura, and Kristian Siedenburg

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Germany

UPDATE Euro zone 3 bond yields soared due to inflation, US economic growth | Instant News


* Eurozone suburban government bond yields tmsnrt.rs/2ii2Bqr (Adding US GDP data, updating charts and prices)

LONDON, April 29 (Reuters) – The sale of eurozone government bonds increased Thursday after US economic growth and higher-than-expected German inflation data came in, bolstering the case for a withdrawal of central bank stimulus.

US economic growth took off in the first quarter, driven by massive government assistance to households and businesses, charting a course for what is expected to be the strongest annual performance in nearly four decades following the pandemic.

In addition, Germany’s annual consumer price inflation accelerated to 2.1% in April, exceeding market expectations and rising further above the ECB’s “close to but below 2%” target.

With the global economy improving, investors are looking for signs that central banks around the world can begin to reduce the extraordinary stimulus that has flowed into economies since the onset of the COVID-19 crisis.

“While there may be temporary factors affecting inflation over the next few months, there is no doubt in anyone’s mind that we are at the start of a growth cycle,” said ING interest rate strategist Antoine Bouvet. “It is logical if the yields continue to increase.”

The yield on German 10-year bonds rose 4.8 basis points to -0.181%, the highest since March 2020. This was also the biggest one-day jump since around mid-March, according to Refinitiv data.

Yields on other eurozone government bonds also rose by four to seven basis points, many of them also hitting their highest levels in months.

Italy’s 10-year yields, for example, are at their highest in seven months at 0.884%.

The long-term eurozone inflation expectations index rose to 1.5417% on Thursday, up from 1.519% the previous day.

The possible decline in bond purchases from the US Federal Reserve has triggered a sharp sell-off in the world’s major government bonds – including in the eurozone – in recent weeks and especially on Wednesday.

But investors received some assurances from Fed Chair Jerome Powell following the conclusion from the interest rate-setting meeting on Wednesday that the US Fed will not immediately reduce its support for the US economic recovery.

Even so, overall government yields have improved significantly, indicating that growth and inflation expectations are high. German 10-year yields, for example, are up about 42 bps this year to date.

“The direction of the journey is very clear. The recovery is in momentum and so is inflation, ”said Bouvet.

Other countries will also report inflation data this week while overall eurozone numbers are due out on Friday.

Reporting by Abhinav Ramnarayan, additional reporting by Dhara Ranasinghe; Edited by Gareth Jones and Kim Coghill

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