“It’s a bit of a bloodbath” on the sovereign debt market where investors are getting rid of their bonds, observes Aurélien Buffaut, director of bond management at Meeaschaert Amilton AM.
Yields soared in the wake of an aggressive message from the European Central Bank on Thursday and the acceleration of inflation in the United States on Friday, which made the market fear an even stronger monetary tightening than expected.
The Frankfurt monetary institution confirmed last week that it would end its bond purchases in early July on the markets and that it would raise its rates in July by a quarter of a point, as expected, without ruling out a larger hike. in September if the inflation outlook persists or deteriorates.
“The market believes that the rise in rates will be harder than expected,” explains Mr. Buffaut.
In the euro zone, the yield on the Bund (German 10-year borrowing rate, which refers) stood at 1.61%, a level not seen since 2014, just like that of France which amounted to 2, 22% around 2:50 p.m. GMT.
“The cessation of asset purchases by the ECB will put pressure on the debts of euro zone countries, particularly peripheral countries such as Italy”, observes Nicolas Forest, director of bond management at Candriam, questioned. by AFP.
The yield on the Italian loan exceeded 4%, a level dating back to the end of 2013.
“It is above all at the level of interest rate spreads that it is advisable to be vigilant in the euro zone: the spread between the 10-year rates of Germany and Italy reached 2.40% this morning, its most high level since May 2020, during the first wave of Covid”, writes Alexandre Baradez, head of market analysis at IG France. A gap “still far from the stress levels reached during the debt crisis in the euro zone where this gap had exceeded 5% in 2011 and 2012”, tempers the expert.
The prospect of a possible tightening of the monetary policy of the American central bank (Fed) at the end of its meeting, which is held on Tuesday and Wednesday, also pushed up the American rates to 10 years to a high for 11 years.