The European Central Bank’s decision to raise the key interest rate by 0.5 percent is reviving the euro. On the bond market, investors are parting with Italian government bonds.
The euro benefited on Thursday from the European Central Bank’s significant interest rate hike. The common currency rose as high as $1.0278 and was up 0.3 percent at $1.0209 in the evening. The currency watchdog around ECB boss Christine Lagarde raised the key interest rate by 50 basis points to 0.50 percent and signaled further tightening. The ECB is thus underlining that it wants to fulfill its role as guardian of price stability, said portfolio manager Thomas Altmann from asset manager QC Partners. The deposit rate, which has also been raised, means that banks no longer have to pay extra when they park excess money with the ECB. Government bonds, on the other hand, flew out of the depots, in return the yield on ten-year federal bonds rose to 1.369 (previous day: 1.262) percent.
Investors withdrew from the southern European country due to uncertainty about Italy’s political future. Italian government bonds flew out of the depots on Thursday, causing the yield on ten-year titles to rise to 3.752 percent (previous day: 3.468 percent).
The gas tap that was opened again by Russia caused prices on the raw materials market to calm down. According to the Federal Network Agency, the capacity utilization of the Nord Stream 1 pipeline could reach a volume of around 40 percent and thus the level before the maintenance. The European natural gas future was at times down nine percent at EUR 147 per megawatt hour. However, it is still extremely high for this time of year, said ABN Amro economist Hans van Cleef. It also remains unclear to what extent the demand in this country will be met. “Energy will be used as a means of exerting political pressure in the coming weeks and months and should therefore also ensure continued high volatility on the stock market,” said strategist Jürgen Molnar from the trading house Robo-Markets.