Eurozone debt comes under pressure ahead of central bank speeches

Eurozone debt comes under pressure ahead of central bank speeches

Short-term eurozone government debt came under pressure on Thursday as central bank officials said they could raise interest rates as soon as July.

The yield on Germany’s two-year bond added 0.1 percentage point to 0.16 percentage points, while the longer dated 10-year Bund yield rose 0.06 percentage points to 0.92 per cent. Bond yields rise as their prices fall.

Those moves came after Luis de Guindos, European Central Bank vice-president, said in a Bloomberg interview that interest rate rises could come in July. His colleague Pierre Wunsch said in a separate Bloomberg interview that the ECB could lift policy rates above zero before the end of 2022.

ECB president Christine Lagarde will participate in an IMF panel on the global economy later on Thursday alongside Federal Reserve chair Jay Powell. Powell and Lagarde are due to make separate speeches on Thursday and Friday respectively.

“Four months ago, Lagarde said it was very unlikely that they’d raise rates in 2022 and now we have rumours of governors speaking about a rate hike in July,” said Bastien Drut, chief thematic macro Strategist at CPR Asset Management. “Everything has changed,” he added.

The rise in the Bund yield, seen as a bellwether for eurozone borrowing costs, also came as