European Bond Yields Drift Lower, Stocks Extend Gains

Bridgette Randall
11 Jan, 2023
Frankfurt

European markets extended this year's gains on the hopes of inflation moderation. 

ECB board member Isabel Schnabel and the governing council member Robert Holzmann made comments supporting a gradual increase in rates to restrictive levels to lower inflation to 2%. 

Government bond yields in the region drifted lower and extended the two-week decline on the hopes of moderating rate hikes. 

The yield on Italian government bonds dropped to  4% and the German Bunds traded below 2.2%, away from the 11-year high 2.6% reached on December 30.   

Investors also awaited the release of December month U.S. inflation data on Thursday. 

U.S. consumer price index in November rose 7.1% on an annual basis and core inflation excluding food and energy jumped 6.0%,the Bureau of Labor Statistics reported last month. 

The December month inflation is expected to hover near 7% and core inflation is expected to edge slightly lower. 

JP Morgan, Wells Fargo, Bank of New York Mellon, Citigroup and Bank of America are scheduled to release earnings on Friday. 

 

Italy's Retail Sales Rebounded In November 

Italy's retail sales in November rose 0.8% after falling 0.3%in October, data from the statistical office Istat showed Wednesday. 

Sales of food increased 0.3% and non-food items rose 1.0% on a monthly basis and on an annual basis retail sales jumped 4.4% after rising 1.2% in October. 

Retail sales have been rising since March 2021. 

 

European Bond Yields Slide On Moderating Inflation Hopes 

The yield on 10-year German Bunds decreased to 2.19%, French bonds decreased to 2.67%, UK Gilts to 3.39% and Italian bonds to 4.03%.

The euro edged higher to $1.07 and the British pound increased to $1.21.

 

Crude Oil Advances On China Hopes 

Crude oil prices rose as much as 2% on the hopes of recovering global demand as business activities in China recover and the government takes steps to support higher economic growth. 

Brent crude oil increased $1.37 to $81.45 a barrel and the Dutch TTF natural gas futures contract edged down 6.3% to