Euro zone yields nudge lower after ECB holds steady, stocks inch up
TLT•Euro zone government bond yields fell and European stocks rose after the ECB held interest rates steady, as expected. Germany’s 10-year yield fell 6 basis points to 3.32%, and the STOXX 600 rose 1%.
1. Markets react to ECB decision
Euro zone government bond yields inched lower and European stocks edged higher after the European Central Bank held interest rates steady, as expected. The ECB warned that surging energy costs could raise inflation while weighing on economic growth, potentially solidifying market bets for a December rate hike.
2. Yields and stocks move
Germany’s 10-year bond yield was down 6 basis points at 3.32%, while the two-year Schatz yield fell 7 basis points to 3.03%. The STOXX 600 was up 1%.
3. Focus turns to leadership
Investors were awaiting a press conference by central bank leaders for clues on the interest-rate outlook. Christine Lagarde announced she would step down on February 7, ahead of schedule. Premier Miton CIO Neil Birrell said her successor would face an environment where rate hikes are expected throughout next year, while energy prices pose risks to both inflation and growth.
