Italy’s bond yields rise on political uncertainty; Powell eyed

Author of the article: MILAN — Italy’s government bonds underperformed their euro zone peers on Tuesday on growing political uncertainty as markets remained focused on the path of U.S. monetary policy normalization and surging inflation. The Italian Parliament will convene to choose a new president this month with Premier Mario Draghi seen as the leading…
Italy’s bond yields rise on political uncertainty; Powell eyed

Author of the article:

MILAN — Italy’s government bonds underperformed their euro zone peers on Tuesday on growing political uncertainty as markets remained focused on the path of U.S. monetary policy normalization and surging inflation.

The Italian Parliament will convene to choose a new president this month with Premier Mario Draghi seen as the leading candidate.

Investors fretted about the country’s political stability should the former European Central Bank chief leave his job as prime minister and assume the presidency.

By 0830 GMT, Italy’s 10-year bond yield was up almost 4 basis points at 1.39%, its highest level since June 2020. .

“Uncertainty over the Italian Presidential election as well as its implications for government stability and the reform agenda is rising,” wrote Carlo Capuano, Vice President, Global Sovereign Ratings at DBRS Morningstar.

More generally, investors’ bets that the Federal Reserve could lift interest rates as early as March ignited a robust sell-off on bond markets in the last few weeks before a key U.S. December inflation reading due on Wednesday.

A Reuters poll predicts consumer prices rose 7% year-on-year.

In comments prepared for delivery at a congressional hearing later in the day, Fed Chair Jerome Powell pledged “to prevent higher inflation from becoming entrenched.”

Some of Wall Street’s biggest banks now expect four U.S. interest increases this year starting in March, a more aggressive call than a week ago.

“U.S. rates should once again set the tone in global fixed income markets. Powell’s hearing will be an opportunity to gauge the aggressiveness of the Fed’s tightening cycle, and it could see the curve front-load hikes further,” ING strategists wrote in a note to clients.

Germany’s 10-year note yield ticked up at -0.032% having risen on Monday as far as -0.025%, its highest level since May 2019, and not far from positive territory.

Elsewhere, Switzerland’s 10-year bond yield held in positive territory after rising above 0% last week for the first time since late October.

On the other side of the Atlantic as well, investors focused on the outlook for euro zone inflation after the December reading unexpectedly rose to a record high of 5% before a speech by European Central Bank President Christine Lagarde.

In an interview with Italian daily Il Sole 24 Ore, the European Central Bank’s chief economist Philip Lane said on Tuesday the ECB does not see euro zone inflation above its 2% target in the medium term.

Furthermore, Spain kicked off on Tuesday the sale of a new 10-year bond via syndication with a size in the 8-10 billion euros ($90.69 billion) range, according to Mizuho strategists. ($1 = 0.8821 euros) (Reporting by Sara Rossi; editing by Saikat Chatterjee and Ed Osmond)

Financial Post Top Stories

Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.

By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300

Read More

Total
0
Shares
Leave a Reply

Your email address will not be published.

Related Posts
Argentina’s central bank hikes benchmark interest rate to 44.5%
Read More

Argentina’s central bank hikes benchmark interest rate to 44.5%

This advertisement has not loaded yet, but your article continues below. Author of the article: Article content Argentina’s central bank raised the country’s benchmark interest rate by 200 basis points to 44.5%, from 42.5% previously, the monetary authority said on Tuesday, amid a series of hikes aimed at bringing down stubborn inflation. (Reporting by Jorge…
Australia forecasts high inflation for another 2 years
Read More

Australia forecasts high inflation for another 2 years

Author of the article: The Associated Press Rod Mcguirk Australia's treasurer Jim Chalmers delivers a budget update at Parliament House in Canberra, Thursday, July 28, 2022. Australia's runaway inflation is forecast to remain too high for the next two years and economic growth will slow without falling into recession, the government's treasurer said on Thursday.…
Butler Concrete and Aggregate Reduces Emission with Hydrogen Fuel Enhancement System
Read More

Butler Concrete and Aggregate Reduces Emission with Hydrogen Fuel Enhancement System

Author of the article: VICTORIA, British Columbia — Located in the rapidly developing area of Vancouver Island, Butler Concrete and Aggregate Ltd. (Butler) has implemented a hydrogen and oxygen fuel enhancement system to their fleet of ready-mix concrete trucks with the help of locally owned and operated Empire Hydrogen Energy Systems Inc. (Empire Hydrogen). The…
Canada pauses imports from Malaysia glove maker Supermax over forced labor concerns
Read More

Canada pauses imports from Malaysia glove maker Supermax over forced labor concerns

Author of the article: KUALA LUMPUR — Canada has paused imports from Malaysian glove maker Supermax Corp as it awaits the results of an audit, weeks after the United States barred the firm over allegations the company uses forced labor. Malaysian factories making everything from medical gloves to palm oil have increasingly come under scrutiny…