FRANKFURT (dpa-AFX) – German government bonds rose moderately on Wednesday. The trend-setting futures contract Euro-Bund-Future rose by 0.04 percent to 170.39 points by the evening after coming under pressure on Tuesday. Ten-year federal bonds yielded minus 0.08 percent. Last week, the return was slightly positive for the first time in almost three years.
On Wednesday, price movements in Germany and throughout Europe were limited. On the financial markets, attention is currently focused on US monetary policy. In the evening, the US Federal Reserve will make its interest rate decision. Clear indications of an imminent interest rate hike are expected. The market has priced in an initial tightening in the pandemic for March. A total of four increases totaling one percentage point are expected for this year. The reason for the turnaround in interest rates is the high inflation of currently seven percent.
“The Fed is under pressure to act faster and more vigorously than previously announced in view of the high inflation rate, especially since the unemployment rate has fallen sharply,” wrote the experts at Landesbank Helaba. “There is no doubt that the data set gives the Fed the opportunity to turn more hawkish and we expect several rate hikes over the course of the year.” However, whether the central bankers will already decide on a preliminary date for March this Wednesday is not a foregone conclusion, because uncertainty about the strength of economic growth has recently arisen.
Somewhat in the shadow of the Federal Reserve, Canada’s central bank has already announced its decisions. It has not raised its key interest rate despite high inflation. It stays at 0.25 percent. Most analysts had expected this. In its statement, however, the central bank gave indications of an imminent interest rate hike: “The economy started 2022 with considerable momentum and a wide range of indicators now suggest that the economic slowdown has been made up for.” The yield on ten-year Canadian government bonds initially came under significant pressure after the interest rate decision, but made up for some of the losses as trading continued./la/jsl/he