Bond Yields Advanced In Europe, Euro and Pound Extended 8-week Losses

Bridgette Randall
22 Sep, 2023
Frankfurt

Interest rate worries dominated stock markets and bond yields advanced across the Euro Area. 

Investors are adjusting to a new reality that interest rates are far from peak rates and central are more likely to continue with rate hike campaigns in the months ahead. 

There was a widespread belief among investors that rate are nearing peaks and central banks are preparing to lower rates in the months ahead. 

However, elevated inflation and the recent rebound in energy prices have forced investors to reevaluate rate path scenario and terminal rate levels expectations. 

The British pound extended 8-week decline, a day after the Bank of England held interest rates steady for the first time since November 2021.   

The bond yields in the Euro Area turned volatile after a survey showed that economy in the currency union is likely to contract in the third quarter. 

 

Europe Indexes & Yields

The DAX index decreased 0.1% to 15,555.87, the CAC-40 index fell 0.4% to 7,182.29 and the FTSE 100 index jumped 0.7% to 7,731.21. 

The yield on 10-year German bonds increased to 2.75%, French bonds traded higher to 3.20%, the UK gilts edged up to 4.29% and Italian bonds rose to 4.56%.

The euro edged lower to a three-month low to $1.063, the British pound to $1.225 and the U.S. dollar fetched 90.65 Swiss cents.

Brent crude increased $0.70 to $94.01 a barrel and the Dutch TTF natural gas edged higher €0.25 to €36.36 per MWh.

 

Europe Stock Movers 

Mothercare Plc declined 3.5% to 4.01 pence after the children's apparel retailer said the company is nearing the completion of refinancing. 

AstraZeneca Plc increased 2.2% to 11,136.04 pence after the company said it found "statistically significant and clinically meaningful" results in a phase III trial for a common type of breast cancer.

Sanofi SA decreased 0.2% to €102.26 after the company said recent developments in the currency markets will negatively impact its third quarter sales between 7.5% and 8.5% and earnings per share between 8.5% and 9.5%. 

Tele2 AB Class B increased 0.5% to skr 86.60 and Telenor ASA advanced 0.9% to €10.87 after the two companies joint venture N4M acquired operating license in Sweden for 900, 2100 and 2600 MHz through an auction for skr 1.475 billion. 

Adevinta ASA jumped 22.1% to €9.13 after the Norwegian marketplace operator confirmed that it has received a takeover offer from a consortium led by Permira and Blackstone.