European Bond Yields Perked Up and U.S. Dollar Traded at 2-month High

Bridgette Randall
17 Aug, 2023
Frankfurt

European markets struggled to advance in the face of growing U.S. rate path uncertainties and sluggish economic recovery in China. 

In cautious trading, stocks lacked direction and bond yields rose and the euro and the pound edged lower on the worries that the U.S. rates are likely to go higher. 

The latest minute of the Fed's policy meeting on July 25-26  showed that several participants were concerned about the elevated inflation despite multiple rate hikes. 

Policymakers worried that interest rates may have to be revised higher to bring down inflation which has stayed above the Fed's preferred rate of 2% despite eleven rate hikes over the last fifteen months.   

 

Europe Indexes & Yields

The DAX index increased 0.05% to 15,782.45, the CAC-40 index fell 0.05% to 7,257.09 and the FTSE 100 index fell 0.2% to 7,340.56.  

The yield on German government bonds traded at a one-month high, lifting yields in the region for other nations as traders assessed inflation risks. 

The yield on 10-year German bonds increased to 2.68%, French bonds traded higher to 3.22%, the UK gilts edged up to 4.60% and Italian bonds increased to 4.39%.

The U.S. dollar traded near a 2-month high after the minutes of the meeting held on July 25-26 raised the prospect of another rate hike at the next policy meeting. 

The euro edged lower to $1.081, the British pound to $1.277 and the U.S. dollar fetched 87.87 Swiss cents.

Brent crude increased $0.87 to $84.34 a barrel and the Dutch TTF natural gas increased €0.82 to €38.61 per MWh.

 

Stock Movers

BAE Systems declined 4.5% to 961.40 pence after the company said it agreed to acquire aerospace business of Ball Corp for $5.55 billion in cash. 

Geberit AG declined 4.5% to CHF 445.60 after the Swiss plumbing supplies company lowered its 2023 outlook. 

Aegon NV declined 3.2% to €4.81 after the Dutch insurer swung to a net loss in the first-half of 2023. 

Rank Group declined 1.5% to 88.10 pence after the gambling company said revenue in the fiscal year 2023 jumped 5.9% but reported a statutory net loss on the account of higher impairment charges.  

GN Store Nord plunged as much as 20% and recovered to a loss of 7.9% to DKK 152.30 after the hearing aid company said marketing conditions are challenging and cited macroeconomic headwinds.