A faster US recovery is pushing up bond yields globally even as the eurozone lags. Photo: Alex Kraus/Bloomberg
Carolynn Look, Alexander Weber and Jana Randow
European Central Bank policymakers are playing down concerns over rising bond yields, suggesting they can manage the risk to the euro-area economy with verbal interventions including a pledge to accelerate bond-buying if needed.
ECB Governing Council members, who meet next week to set policy, see no need for drastic action such as expanding the overall size of their €1.85trn emergency asset-purchase program, according to officials familiar with internal discussions.
The officials didn’t say whether the pace of purchases has been stepped up in recent days, for which data isn’t yet available. One person noted that yields fell on Monday after some policy makers said the institution would react against unwarranted increases. An ECB spokesman declined to comment.
T he relatively sanguine mood was backed up yesterday by Governing Council members including ECB Vice President Luis De Guindos and Bundesbank President Jens Weidmann, who said in public remarks that they’re not too worried.
European yields rose, led by the longest-dated debt. The rate on German 10-year bonds climbed as much as seven basis points to minus 0.28pc. The euro was down 0.2pc at $1.2073 at the close of trade in Frankfurt.
The global sell-off of government bonds originates from the US , where prospects of massive fiscal stimulus are bolstering the economy and lifting inflation expectations.
In Europe, Greek and Italian 10-year yields led the charge, climbing about 20 basis points in the past two weeks. Benchmark German yields touched levels last seen in March 2020, and those for their French equivalents briefly turned positive for the first time since June.
That’s a problem for the euro area because sovereign yields are used by banks as a reference point for lending.
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