With two days to go before the ECB meeting, interest on the debt soars to new highs. Rate hikes put pressure on the markets, and the Ibex corrects part of what it gained yesterday.
Investors started the day with yet another test of central banks’ determination to curb inflationary pressures. Australia’s central bank has surprised the market by announcing an even more aggressive rate hike than expected. This morning he increased rates by 50 basis points at once, in line with the latest Fed rallies.
In recent days, analysts have not ruled out the option that the European Central Bank will also choose to accelerate the pace of rate hikes with some increase, at the July or September meetings, of 50 basis points, instead of the most common 25 basis points. The ECB could help clear up these and other unknowns in two days. Thursday’s meeting will include a review of its growth and inflation forecasts, estimates that will be scrutinized to determine the options of a soft landing for the economy, or stagflation or even recession.
The control of inflation is the absolute priority of central banks at the present time, and this concern is transferred to the fixed income market. Debt interest soars to new highs in Europe. Two days after the ECB, the return on the German bund climbs above 1.30%, and that of the ten-year Spanish bond hits new highs above 2.50%. On the other side of the Atlantic, in the US, the interest rate on the ten-year bond has once again exceeded the 3% barrier, with an eye on the US CPI data that will be released on Friday.
Next extension.
