ECB President Lagarde said today that the European Central Bank is closely monitoring nominal yields on long-term bonds. In this way, the bank wants to support all sectors of the economy by providing favorable financing conditions - despite the fact that yields in the euro area are at record low levels. The reaction on the European debt market was immediate - the yields of bonds from the Old Continent began to decline (and their prices to rise). This event can therefore be considered an important verbal intervention by the ECB. On the currency market, and more specifically on the EURUSD pair, we could initially see a weaker euro (drop below 1.2140), but the move was quickly negated and the price rose above 1.2150 level.
The statement of President Lagarde was made due to the rising inflation expectations in the US, which contributes to the dynamically rising yields on US bonds. Yields on 10-year bonds at some point increased to around 1.40%, which continues to put pressure on the equity markets. The main US indices opened lower today and if this situation continues until the close of the day, the S&P 500 may end the 5th session in a row lower. It is worth emphasizing that, after Lagarde's words, the yields on 10-year US bonds also started to decline.
Bund prices soared after the words of the ECB president Lagarde - thus their yields fell. Source: xStation5
This content has been created by X-Trade Brokers Dom Maklerski S.A. This service is provided by X-Trade Brokers Dom Maklerski S.A. (X-Trade Brokers Brokerage House joint-stock company), with its registered office in Warsaw, at Ogrodowa 58, 00-876 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. X-Trade Brokers Dom Maklerski S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.