Saxo Bank hæfter sig ved, at renten på statspairer i Europa overraskende og hurtigt er røget i vejret – delvist som en reaktion på højere amerikanske renter i forventning om den amerikanske centralbanks møde i dag. ECB forudser en bedre økonomisk udvikling end hidtil ventet og vil ikke ændre på sit PEPP-program foreløbig.
Summary: Yesterday saw German bund and EU sovereign yields suddenly lurching higher, in part in sympathy with a move higher in US treasuries ahead of a speech tomorrow from US Federal Reserve Chair Powell.
European sovereigns had their worst day in six months (VGEA:xetr, BTP10:xmil, IS0L:xetr). Italians and German government bond yields rose the most since February as investors were reducing risk ahead of the Jackson Hole meeting. To add to the selloff, Guindos said that the ECB could revise upward its economic projections spurring reflation trade fears across the market. It is critical to accept that Bund yields are now closely correlated to those of the United States, and as yields rise in the US, we expect yields in the old continent to follow.
South Korea hikes interest rates – in a surprise move that made it the first Asian central bank to take rates higher with at 25-bp hike to 0.75% as it maintained its growth forecast for this year, but raised its CPI outlook to 2.1%, just above the 2.0% target and cited financial risks as a larger threat to the recovery than the course of the virus outbreak.
ECB speakers were in the front line. ECB Vice President Luis de Guindos warned that the ECB might revise up its macroeconomic projections at its upcoming meeting of 9 September given the recent solid activity indicators and little impact from the Delta variant on the eurozone economy. ECB chief economist Philip Lane was optimistic about the economic outlook too. However, he dismissed calls to discuss the end of PEPP in September. He rather advocated to focus on the pace of bond purchases during the coming quarter, especially if the Fed taper creates spill overs.
