Thursday October 23, 2014 Search
Weather | Athens
24o C
14o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Bond market girds for ECB meeting with sub-zero short-term rates

German bonds were little changed as fixed-income traders prepared for a monetary-policy decision from the European Central Bank amid speculation officials will boost stimulus measures to support the euro-area economy.

Bonds across the region surged last week, pushing yields to record lows, as ECB President Mario Draghi fueled bets on asset purchases by saying in an Aug. 22 speech officials were “ready to adjust our policy stance further.”

Governments are benefiting from the rally as they lock in lower borrowing costs, with Spain and France set to sell a combined 12 billion euros ($15.8 billion) of debt today. The prospects for ECB action have also sent money-market rates to record lows.

“The market is expecting some degree of action, or at least verbal support, given Draghi’s dovish shift at Jackson Hole,” said Richard McGuire, head of rates strategy at Rabobank International in London, referring to his speech last month. “If we didn’t get anything, if the ECB dug its heels in, then that would result in disappointment which would initially see higher core yields led by the longer end of the curve.”

A yield curve is a chart of rates on securities of varying maturities.

German 10-year yields were at 0.95 percent as of 7:21 a.m. London time. The price of the 1.5 percent bund due May 2024 was 105.095 percent of face value.

Bonds rallied after Draghi’s pledge last month to use “all the available instruments needed to ensure price stability.” The average yield to maturity on euro-area government securities dropped to 1.045 percent on Aug. 27, the lowest since at least 1994, according to Bank of America Merrill Lynch indexes.

Lost decade

Europe is struggling to avoid a lost decade, after a debt crisis sent yields including those in Italy, Spain, Greece and Portugal surging in 2011 and 2012, threatening to splinter the currency bloc.

The euro area’s annual inflation slowed to 0.3 percent in August, increasing pressure on the ECB to take action. The central bank’s inflation target is just under 2 percent. Inflation expectations as measured by the so-called five-year, five-year forward break-even rate were at 2 percent today, down from 2.22 percent at the end of 2013.

Six economists in a Bloomberg News survey predict the ECB will cut its key rate Thursday  while the remaining 51 forecast no change.

Money markets show investors are predicting interest rates will remain low for an extended period.

Negative Eonia

The euro overnight index average, or Eonia, which measures the cost of lending between euro-area banks, fell to a record minus 0.013 percent on Sept. 1 after turning negative for the first time last week. It was set at minus 0.006 percent on Wednesday. Three-month Eonia swaps dropped to the the least since at least 1999 on Sept. 2 and rates out to two years are negative.

The cost of swapping euro funding streams for those in dollars slid to the lowest since August 2013 on Sept. 1, closing-market data compiled by Bloomberg showed. The one-year euro-dollar cross-currency basis swap was about 14 basis points below the euro interbank offered rate, showing traders are paying a premium to exchange euro-based cash flows for those in dollars.

The ECB will publish its rate decision at 12:45 p.m. London time and Draghi will speak at a press conference 45 minutes later in Frankfurt.

Spain plans to auction 10- and 30-year bonds today. The nation last sold debt maturing in 2024 on Aug. 7 at a record-low average yield of 2.686 percent. France will offer bonds due in 2024, 2030 and 2045.

Euro-area government securities returned 9.7 percent this year through Thursday, Bloomberg World Bond Indexes show. Spain’s have earned 13 percent, France’s 8.4 percent and Germany’s 6.9 percent. [Bloomberg]

ekathimerini.com , Thursday September 4, 2014 (10:46)  
Athens weighs its LNG and CNG options
Greece ranks among global leaders in tourism growth
Global oil price drop sends local fuel prices back to 2010 levels
Buy big house, become a citizen
Cyprus seeks EU response over Turkey´s EEZ violation
Cyprus is to raise the issue of Turkey’s violation of its exclusive economic zone (EEZ) at Thursday’s European Council meeting after Turkish Prime Minister Ahmet Davutoglu raised the specter...
Thirteen indicted for inmate torture
Thirteen correctional officers and their former warden will stand trial in Serres, northern Greece, over the death of Albanian inmate Ilie Kareli on March 27 at Nigrita Prison. Kareli was tr...
Inside News
SOCCER
Roberto´s heroics make Kasami´s goal count
Pajtim Kasami’s goal and Roberto’s heroics in goal saw Olympiakos claim one of the biggest wins in its history on Wednesday downing Italian champion Juventus 1-0 to boost its chances of reac...
SOCCER
Third-division Iroditos punished heavily after fan death
Greek third division team Irodotos has been docked 15 points and ordered to play 10 matches behind closed doors following the death of an Ethnikos Piraeus supporter, the Hellenic Football Fe...
Inside Sports
COMMENTARY
Careful what you wish for
Everyone is in a rush to become prime minister in this country, as if they have not learned a single thing from its political history. While still in opposition, PASOK’s George Papandreou ma...
EDITORIAL
Taking care of our key industry
It’s time to face facts: Tourism is the country’s heavy industry. The sector’s considerable contribution has served as a stabilizing factor for the local economy, essentially placing the cou...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Roberto´s heroics make Kasami´s goal count
2. Athens weighs its LNG and CNG options
3. Greece ranks among global leaders in tourism growth
4. Global oil price drop sends local fuel prices back to 2010 levels
5. Buy big house, become a citizen
6. Cyprus seeks EU response over Turkey´s EEZ violation
more news
Today
This Week
1. At least 11 banks to fail European stress tests, three in Greece, report says
2. Cyprus to block Turkey's EU talks after EEZ violation
3. EU’s Juncker wins Commission-team approval with investment vow
4. Juncker’s EU commission team set for parliamentary green light
5. Taprantzis resigns from privatization agency TAIPED
6. Fallen tree, smashup cause traffic jams in Athens
Today
This Week
1. Istanbul skyscraper casts shadow over Greece's banking ambitions
2. Coalition shooting itself in the foot
3. Greece’s closed society is central to its current malaise
4. Greece must stick to reforms, says Schaeuble
5. The past, present and future of the Greek debt crisis
6. Samaras’s crumbling Greek exit lacks backing from economists
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.