Euro zone bond yields steady as markets assess US, UK inflation data
The June CPI data out of the U.S. on Tuesday showed an increase of 0.3%, suggesting tariffs are reading through to prices, and spurring investors to slightly scale back their bets on Federal Reserve rate cuts with Wall Street markets falling late on Tuesday as treasury yields rose.
But the mood was decidedly muted on Wednesday, with German 10-year yields, the euro area's benchmark, down a mere 1 bps to 2.7%, hovering just off a nearly four-month high of 2.737% scaled on Monday.
"It's relatively quiet - no spillover from UK CPI to Europe. A pause after a run up in yields makes sense. I'm keeping a close eye on stocks after profit warnings .. that puts a brake on yields," said Kenneth Broux, head of corporate research FX and rates at Societe Generale.
The two-year yield – more sensitive to expectations for European Central Bank policy rates – was also down 1 bp to 1.86% .
The German 30-year yield was down 1 bps at 3.23%, having risen to its highest level since October 2023 on Monday, touching 3.26%.
Markets are looking ahead to U.S. producer price data due later to assess the extent of inflationary pressures in the U.S.
UK CPI data meanwhile showed Britain's annual rate of consumer price inflation unexpectedly rose to its highest in over a year, at 3.6% in June.
The print meant UK 10-year gilts were a rare outlier, rising 2 bps to 4.65%, while most of the other major government bonds yields were slightly down.
Markets are focused on U.S. President Donald Trump's ongoing trade war, with his latest move being a 19% tariff on goods from Indonesia under a new agreement with the Southeast Asian country.
It comes as the European Union is readying retaliatory measures should talks with Washington fail.
Planned U.S. tariffs of 30% on imports from the EU could cost the German economy about a quarter of a percentage point in growth this year and next compared with current forecasts, the IMK institute said on Wednesday.
Elsewhere, the German cabinet approved on Wednesday a medium-term fiscal plan that will be submitted to the European Commission, a spokesperson from the finance ministry said.
Italian EU-harmonised consumer prices (HICP) rose 0.2% month-on-month in June and were up 1.8% from the year earlier, official statistics agency ISTAT said on Wednesday, slightly revising up preliminary data.
The European Union statistics office on Wednesday said the euro zone's May seasonally adjusted trade balance was 16.2 billion euros, with an earlier Reuters poll expecting 13 billion euros.
(Reporting by Lucy Raitano; Editing by Amanda Cooper and Bernadette Baum)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Gulf Today
5 hours ago
- Gulf Today
EU agrees to start talks with Gulf nations on strategic ties
European Union member states approved the launch of negotiations with six Gulf countries as the bloc seeks to broaden its international partnerships, Bloomberg reported. European affairs ministers gave the green light to the opening of talks aimed at concluding bilateral Strategic Partnership Agreements with Gulf Cooperation Council countries, during a meeting in Brussels on Friday. Negotiations are expected to begin as soon as possible and to address a broad spectrum of issues, including security and energy, as the EU is stepping up efforts to diversify relationships. 'Through the Strategic Partnership Agreements, we aim to take our cooperation to the next level,' European Commissioner for Mediterranean Dubravka Šuica told Bloomberg. WAM
The National
6 hours ago
- The National
'Genius' move: What are the goals of the three US crypto bills?
US President Donald Trump has signed the Genius Act into law, setting the stage for greater cryptocurrency supervision in line with America's aim to be the global leader in digital asset s. The bipartisan bill is one of three that had both Capitol Hill and crypto enthusiasts buzzing, as it would set the US up for the future of finance, while also being a legacy move for Mr Trump, who has gone from crypto sceptic to champion. 'The Genius Act could become a defining milestone for stablecoin policy. Moving stablecoins out of regulatory ambiguity won't just enable institutional participation, it will require it,' said Omar Elassar, managing director of venture capital firm Animoca Brands Middle East. The National reported that cryptocurrencies will not become mainstream unless the acts enforce strong regulations. We take a look at the three acts and how they would redefine cryptocurrency regulation and its future. Genius Act: 'Long overdue' According to the White House, the Genius Act is meant to make America 'the undisputed leader in digital assets'. The 'long-overdue' law is intended to prioritise consumer protection and strengthen the US dollar's reserve currency status, in addition to improving national security, which is one of the Trump administration's pillars. Also, the Genius Act is aimed at bringing 'massive' investment and innovation to the US, the world's top economy – although the latter is being challenged by others, most notably by rival China. The bill details strict regulations for stablecoins, which aim to address cryptocurrencies' shortcomings by pegging their value to a unit of an underlying asset, are often issued on faster blockchains and backed by state-issued tender such as the dollar, pound, euro and highly liquid reserves including government treasuries or commodities such as precious metals. Also, a stablecoin is different from a central bank digital currency, or CBDC: the former is privately issued, while the latter is government-backed. Both, however, aim to make transactions faster, cheaper and more secure, and would serve emerging markets well. The Genius Act will usher in the creation of the first-federal regulatory system for stablecoins. It also requires 100 per cent reserve backing with liquid assets like the dollar or short-term Treasuries and mandates issuers to make monthly, public disclosures. Should a stablecoin issuer become insolvent, the Genius Act will prioritises stablecoin holders' claims over all other creditors, it added. 'The passage of the Genius Act is a true watershed moment for the US. It is a defining step for responsible crypto policy … giving issuers, builders, and regulators the clear rules they have been asking for,' said Ji-Hun Kim, president of the Washington-based Crypto Council for Innovation. All said, the Genius Act aims to ensure the greenback remains the world's reserve currency, help fight illicit activity in the crypto world and make the US the global leader for digital assets. Clarity Act: Dual supervision The Digital Asset Market Clarity Act of 2025, or Clarity Act, meanwhile, aims to establish a regulatory framework for digital commodities – namely, the classification, offering, trading and supervision of digital assets. It will also define clear lines of jurisdiction between the Securities and Exchange Commission and the Commodity Futures Trading Commission, two of the top US asset regulators that have been monitoring the digital asset situation and cracked down on crime – most notably the case involving jailed FTX boss Sam Bankman-Fried. That means it is expected to be a strict law because, 'at its core, it introduces a dual-agency approach to oversight', said Jerry Huang, an associate at Canadian law firm McMillan. The Clarity Act calls for how digital assets may be offered, sold and traded in the US, and the registration of brokers, dealers and trading facilities, who must maintain fair trading and anti-manipulation systems, ensure real-time transparency and adopt anti-money laundering and know-your-customer programmes. These would help reduce 'legal uncertainty for issuers, developers and intermediaries, while strengthening investor protections and market integrity', Mr Huang added. Anti-CBDC Surveillance State Act: 'Weapon' control The summary of the Anti-CBDC Surveillance State Act is to 'amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, to prohibit the use of central bank digital currency for monetary policy and for other purposes'. In other words, a CBDC carries the risk of the government being able to surveil people's financial transactions and 'suppress politically unpopular activity', said Congressman Tom Emmer, the bill's main author, who also noted that a CBDC is 'is government-controlled, programmable money'. 'For years, we have worked to educate our colleagues on the dangers of this insidious technology, which would undermine our values and destroy Americans' right to privacy. Now, we must codify [CBDC] to ensure that the United States' digital currency policy remains in the hands of the American people. The bill aims to prevent future administrations from weaponising CBDC technology against the American people, he said. The American Bankers Association agreed in a letter to Mr Emmer, saying that a CBDC 'is unnecessary in the US and would present unacceptable risks and costs to the financial system'. Are these bills bulletproof? Whether these three legislations work as they are intended to do so remains to be seen, especially as digital assets remain vulnerable to misuse and are being used in illegal activity – a lot. In 2024, more than 99 per cent of stablecoin volume was legitimate – but stablecoins accounted for about 60 per cent of illicit transaction across the crypto ecosystem, according to an analysis from blockchain platform TRM Labs. 'Their speed, liquidity, and perceived stability can make them attractive for ransomware payments, terrorist financing, romance and investment scams, sanctions evasion, over-the-counter fraud and large-scale laundering,' said Ari Redbord, a vice president at San Francisco-based TRM. That corroborates an earlier report from Chainalysis, which found out that 63 per cent of all illicit transaction volumes involve stablecoins. 'The integration of stablecoins into traditional finance creates new systemic risk vectors that extend beyond individual protocols or platforms,' analysts at New York-based Chainalysis said. 'A failure of a major stablecoin could trigger cascading liquidations across interconnected protocols, potentially freezing large portions of the DeFi [decentralised finance] ecosystem.'
Khaleej Times
8 hours ago
- Khaleej Times
EU agrees to start talks with Gulf nations on strategic ties
European Union member states approved the launch of negotiations with six Gulf countries as the bloc seeks to broaden its international partnerships, Bloomberg reported. European affairs ministers gave the green light to the opening of talks aimed at concluding bilateral Strategic Partnership Agreements with Gulf Cooperation Council countries, during a meeting in Brussels on Friday. Negotiations are expected to begin as soon as possible and to address a broad spectrum of issues, including security and energy, as the EU is stepping up efforts to diversify relationships. 'Through the Strategic Partnership Agreements, we aim to take our cooperation to the next level,' European Commissioner for Mediterranean Dubravka Šuica told Bloomberg.
