Latest news with #Bund
Yahoo
7 days ago
- Business
- Yahoo
Eurozone disinflation on track as price pressures ease in Germany, Italy and Spain
Consumer price growth in Germany held steady in May, while inflation eased in Spain and Italy, reinforcing expectations of a broader disinflation trend across the eurozone. The preliminary figures released by Germany's Federal Statistical Office on Friday show that annual inflation in the eurozone's largest economy held steady at 2.1% in May 2025. The reading came in slightly below analysts' expectations of 2.2%. On a monthly basis, German consumer prices rose by just 0.1%, a sharp slowdown from April's 0.4% increase and the weakest gain since January. Core inflation, which strips out food and energy, is estimated to have risen by 2.8% year-on-year, indicating that underlying inflationary pressures remain more resilient. Disinflation trends are also visible across Southern Europe. In Spain, preliminary data show the annual consumer price index fell to 1.9% in May, down from 2.2% in April and under the 2.1% anticipated by markets. The deceleration was largely driven by lower prices in leisure and cultural services, as well as more modest increases in electricity and transport costs compared to the same period in 2024. Spanish core inflation also edged down by 0.3 percentage points, settling at 2.1%. Italy recorded an annual inflation rate of 1.7% in May, slipping from 1.9% in April and in line with consensus forecasts. The latest national readings reinforce expectations that euro area headline inflation will ease further when the aggregate May data are published next week. Median economist forecasts point to a decline from 2.2% in April to 2.1% in May. Goldman Sachs on Friday lowered its forecast for eurozone inflation to 1.95% year-on-year, down from a prior estimate of 1.99%. The bank also revised its core inflation forecast downward by seven basis points, to 2.37%, citing subdued underlying pressures in Germany. With inflation across the bloc moving further closer to the European Central Bank's 2% target, the data add weight to expectations that the ECB may continue to ease interest rates at its next week meeting. The euro traded flat at 1.1335 against the dollar after Germany's inflation print, though it remained 0.3% down on the day. European government bond yields were little changed, with the German 10-year Bund yield steady at 2.53%. Equity markets showed mixed performance. The Euro STOXX 50 index dipped 0.4% by mid-afternoon, on track for a broadly unchanged week. Germany's DAX, however, gained 0.2%, climbing back above the 24,000 mark. In other news, oil prices fell sharply amid speculation that OPEC+ could increase production by more than 411,000 barrels per day in July. WTI crude futures dropped over 1.5% to $60.2 (€55.3) per barrel, while Brent slid below $63 (€57.9). Meanwhile, geopolitical risks resurfaced after US President Donald Trump accused China of violating the bilateral trade agreement, reigniting concerns over potential tariff escalations. Error in retrieving data Sign in to access your portfolio Error in retrieving data
Yahoo
7 days ago
- Business
- Yahoo
Eurozone disinflation on track as price pressures ease in Germany, Italy and Spain
Consumer price growth in Germany held steady in May, while inflation eased in Spain and Italy, reinforcing expectations of a broader disinflation trend across the eurozone. The preliminary figures released by Germany's Federal Statistical Office on Friday show that annual inflation in the eurozone's largest economy held steady at 2.1% in May 2025. The reading came in slightly below analysts' expectations of 2.2%. On a monthly basis, German consumer prices rose by just 0.1%, a sharp slowdown from April's 0.4% increase and the weakest gain since January. Core inflation, which strips out food and energy, is estimated to have risen by 2.8% year-on-year, indicating that underlying inflationary pressures remain more resilient. Disinflation trends are also visible across Southern Europe. In Spain, preliminary data show the annual consumer price index fell to 1.9% in May, down from 2.2% in April and under the 2.1% anticipated by markets. The deceleration was largely driven by lower prices in leisure and cultural services, as well as more modest increases in electricity and transport costs compared to the same period in 2024. Spanish core inflation also edged down by 0.3 percentage points, settling at 2.1%. Italy recorded an annual inflation rate of 1.7% in May, slipping from 1.9% in April and in line with consensus forecasts. The latest national readings reinforce expectations that euro area headline inflation will ease further when the aggregate May data are published next week. Median economist forecasts point to a decline from 2.2% in April to 2.1% in May. Goldman Sachs on Friday lowered its forecast for eurozone inflation to 1.95% year-on-year, down from a prior estimate of 1.99%. The bank also revised its core inflation forecast downward by seven basis points, to 2.37%, citing subdued underlying pressures in Germany. With inflation across the bloc moving further closer to the European Central Bank's 2% target, the data add weight to expectations that the ECB may continue to ease interest rates at its next week meeting. The euro traded flat at 1.1335 against the dollar after Germany's inflation print, though it remained 0.3% down on the day. European government bond yields were little changed, with the German 10-year Bund yield steady at 2.53%. Equity markets showed mixed performance. The Euro STOXX 50 index dipped 0.4% by mid-afternoon, on track for a broadly unchanged week. Germany's DAX, however, gained 0.2%, climbing back above the 24,000 mark. In other news, oil prices fell sharply amid speculation that OPEC+ could increase production by more than 411,000 barrels per day in July. WTI crude futures dropped over 1.5% to $60.2 (€55.3) per barrel, while Brent slid below $63 (€57.9). Meanwhile, geopolitical risks resurfaced after US President Donald Trump accused China of violating the bilateral trade agreement, reigniting concerns over potential tariff escalations.
Euronews
7 days ago
- Business
- Euronews
Eurozone disinflation on track as price pressures ease in Germany
Consumer price growth in Germany held steady in May, while inflation eased in Spain and Italy, reinforcing expectations of a broader disinflation trend across the eurozone. The preliminary figures released by Germany's Federal Statistical Office on Friday show that annual inflation in the eurozone's largest economy held steady at 2.1% in May 2025. The reading came in slightly below analysts' expectations of 2.2%. On a monthly basis, German consumer prices rose by just 0.1%, a sharp slowdown from April's 0.4% increase and the weakest gain since January. Core inflation, which strips out food and energy, is estimated to have risen by 2.8% year-on-year, indicating that underlying inflationary pressures remain more resilient. Disinflation trends are also visible across Southern Europe. In Spain, preliminary data show the annual consumer price index fell to 1.9% in May, down from 2.2% in April and under the 2.1% anticipated by markets. The deceleration was largely driven by lower prices in leisure and cultural services, as well as more modest increases in electricity and transport costs compared to the same period in 2024. Spanish core inflation also edged down by 0.3 percentage points, settling at 2.1%. Italy recorded an annual inflation rate of 1.7% in May, slipping from 1.9% in April and in line with consensus forecasts. The latest national readings reinforce expectations that euro area headline inflation will ease further when the aggregate May data are published next week. Median economist forecasts point to a decline from 2.2% in April to 2.1% in May. Goldman Sachs on Friday lowered its forecast for eurozone inflation to 1.95% year-on-year, down from a prior estimate of 1.99%. The bank also revised its core inflation forecast downward by seven basis points, to 2.37%, citing subdued underlying pressures in Germany. With inflation across the bloc moving further closer to the European Central Bank's 2% target, the data add weight to expectations that the ECB may continue to ease interest rates at its next week meeting. The euro traded flat at 1.1335 against the dollar after Germany's inflation print, though it remained 0.3% down on the day. European government bond yields were little changed, with the German 10-year Bund yield steady at 2.53%. Equity markets showed mixed performance. The Euro STOXX 50 index dipped 0.4% by mid-afternoon, on track for a broadly unchanged week. Germany's DAX, however, gained 0.2%, climbing back above the 24,000 mark. In other news, oil prices fell sharply amid speculation that OPEC+ could increase production by more than 411,000 barrels per day in July. WTI crude futures dropped over 1.5% to $60.2 (€55.3) per barrel, while Brent slid below $63 (€57.9). Meanwhile, geopolitical risks resurfaced after US President Donald Trump accused China of violating the bilateral trade agreement, reigniting concerns over potential tariff escalations. Inflation in Spain fell in May to 1.9%, but the underlying inflation index remains above the price stability level, at 2.1%, according to data published on Friday by the National Statistics Institute (INE). The Consumer Price Index (CPI) reached its lowest value since last October, when it stood at 1.8%. The European Central Bank considers that the best way to maintain price stability in the euro area is to have an inflation target of 2% in the medium term, according to the Bank of Spain. Therefore, the general index achieves a certain stability after the high percentages registered during the last year. However, the underlying index, which eliminates the effect of the most volatile prices, is above 2%. However, the Harmonised Index of Consumer Prices (HICP) fell by 0.3 percentage points year-on-year in May to 1.9%, and recorded a monthly decrease of 0.1%. With the slowdown in the year-on-year CPI recorded in May, inflation has now seen three consecutive months of declines in its annual rate. According to INE, this moderation, which places the CPI at 1.9%, is mainly due to the drop in leisure and culture prices, lower prices in the transport sector, and a smaller increase in electricity tariffs compared with the same month in 2024. The Ministry of Economy, Trade and Enterprise stressed that the favourable evolution of services related to the tourism sector, along with the positive performance of electricity prices, played an important part in this inflation decline. With the decrease in May, the core inflation rate returns to a path of moderation following a rise of 0.4 percentage points in April.
Yahoo
7 days ago
- Business
- Yahoo
Analysis-German Bund anchor can shield euro area from excessive curve steepening
By Stefano Rebaudo (Reuters) -A global selloff in government bonds due to concerns over high debt and bond sales has not left the euro zone unscathed, but Germany's growing safe-haven status should shield the bloc from an excessive rise in long-term borrowing costs. Major bond markets from the United States to Japan and Europe have seen their bond curves steepen sharply - meaning long-term bond yields have risen faster than short-term yields - a challenging environment for issuers. Germany's 30-year bond yields have jumped around 40 basis points so far this year, in a move largely driven by the creation of a 500 billion euro ($546 billion) infrastructure fund and an easing of strict borrowing rules to help lift defence spending. Yet investors and analysts say that a sharp steepening across euro-area bond markets is likely to fade from here, as a relatively better debt trajectory for Germany and global tariff uncertainty bolsters the safe-haven appeal of Bunds. In an early indication of the trend, the gap between 2-year and 10-year German bond yields looks set to end May with its first monthly drop in over a year, sliding seven basis points (bps) to 74 bps. An increase in the curve slope can create challenges for highly indebted countries, which will face higher costs when they issue new bonds, as recent weak auction results in Japan and the United States highlight. It can also complicate the monetary policy outlook by triggering an unwanted tightening of financial conditions. But in Germany's case, the steepening pressure is easing for a few reasons. Higher bond supply is now priced in. Tariff uncertainty means the European Central Bank is likely to remain in easing mode. And, compared to its peers, German debt dynamics make it a better place to park cash in times of stress. Amundi's global fixed income investment officer Gregoire Pesques said Europe's biggest asset manager had taken profit on some curve steepening trades. "In Germany, we are short 2-year bonds, short the 30-year bond, and long the 10-year bond," he said. Pesques mentioned the possibility of a more dovish than expected ECB outlook given low energy prices and a strong euro, adding there was a lack of appetite for 30-year bonds as a repricing of expectations for more bond supply is under way. The euro is up around 9% this year against the dollar, and oil prices have fallen around 13%, helping dampen inflation. Konstantin Veit, portfolio manager at bond giant PIMCO, said he saw a plausible new range of 2.5 to 3.5% for 10-year Bund yields given German fiscal plans, assuming an ECB policy rate of 2%. Germany's 10-year Bund yield is trading around 2.5%, up around 15 bps so far this year, while its UK and U.S. peers are down eight and 15 bps respectively. Germany's yield curve is currently steeper than the United States' because the ECB has almost completed its easing cycle, while the U.S. Federal Reserve is expected to cut rates mostly in 2026, analysts said. STRONGEST LINK Debt sustainability is also on investors' minds after the U.S. suffered a sharp bond selloff in early April, with investors questioning the safe-haven status of U.S. Treasuries. Since then, ratings agency Moody's has stripped the United States of its remaining triple-A credit rating and a recent 20-year bond sale was met with tepid demand. In contrast, though German debt is also rising, Europe's biggest economy is the only G7 member with a debt-to-GDP ratio below 100%, bolstering its safe-haven credentials. Notably, when U.S. and other major bond markets sold off in April, the Bund market held firm. Ratings agency S&P argues that German fiscal stimulus, expected to bolster long-term growth, supports the country's triple-A credit rating. Consultancy Saltmarsh Economics estimates that even without any nominal GDP growth, an extra 325 billion euros of debt would push Germany's debt-to-GDP ratio up to 70%, from current levels around 63%. And an extra 750 billion euros of debt would increase it to a still very low 80%. "Germany is unique in its fiscal conditions and has room to do more, but other (European) countries will have to compensate for higher defence spending in their budget," said PIMCO's Veit. We don't think European fiscal policy will be very expansionary in the next couple of years," he added. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Recorder
27-05-2025
- Business
- Business Recorder
Euro zone yields edge down as tariff-turbulence ebbs
LONDON: Euro zone government bond yields dipped on Tuesday, ahead of a raft of regional inflation readings this week and as investors digested the latest reversal in US tariff policy towards the European Union. The yield on 10-year German Bunds, which serve as a benchmark for the wider euro zone market, was down 1.1 basis point at 2.55% while that on 30-year debt eased 1.7 bps to 3.062%, although the drops lagged the declines seen in long-dated Japanese and US bond yields. With inflation numbers on both sides of the Atlantic due this week, there could be room for another price rally, according to Commerzbank head of rates Christoph Rieger. 'Further bullish hopes are pinned on this week's inflation figures, but the first leads from France today may not fulfil these expectations,' Rieger said. 'In contrast to the pending German and euro zone numbers, our economists expect a small increase in the headline rate, which could be above consensus. With lower German numbers still expected by the end of the week, which could take the headline rate back to 2%, we suggest buying into potential dips at 10y Bund yields around 2.6%,' he said. Yields on the two-year Schatz were fairly flat on the day at 1.794%. Last week, two-year yields touched their lowest in nearly a month, as investors showed a preference for non-US debt, given the unpredictability of US tariff policies and the growing concern over the long-term finances of the US government. Euro zone yields nudge higher, long-dated bonds under pressure Two-year yields are typically more reactive to shifts in expectations for European Central Bank monetary policy, yet much of the focus lately has been on trade uncertainty and government finances. Elsewhere, yields on 10-year Italian, French and Spanish bonds edged lower by around 1-2 bps, reflecting a relative sense of stability to trading on Tuesday.
