Euro Zone Bond Rally Continues With ECB in the Market

Euro Zone Bond Rally Continues With ECB in the Market

4 April 2016, 12:44
Roberto Jacobs
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Euro Zone Bond Rally Continues With ECB in the Market

From last Friday onwards, European Central Bank (ECB) is in the bond market with additional firepower and on average, from now on it will be purchasing almost €4 billion worth of bonds, every trading day. It could even step up its purchase like last time, frontloading in the summer months.

Thanks to ECB’s new boost, bond issuance by Euro Zone corporates reached record high in March, €50 billion. Similar is expected in April too.

While Euro is defying ECB’s policy intention so far, bond yields are dropping across Euro Zone.

  • Austria’s 10 year yield is down 2%, trading at 0.34%
  • Finland’s 10 year is down more than 4%, trading at 0.4%
  • France’s 10 year yield is down -1.6% or 6 basis points.
  • German 10 year is down more than 9%, trading just 13 basis points above zero mark.

Expect bond market in Euro Zone to rally further, especially the corporate bond segment. Higher rated bonds with rally more than the lower rated ones, even within investment grade universe.

Euro on the other hand is strong thanks to weaker Dollar, trading at 1.137 against Dollar.

The material has been provided by InstaForex Company - www.instaforex.com

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