Investors are reversing equity positions in full escalation of government bond yields
There is no calm in the market after yesterday’s sharp declines on Wall Street. Confirmation that the European Central Bank (ECB) will have to act more aggressively in its fight against inflation has left a bad taste with investors, who also look forward to the release of the CPI in the US this Friday.
The Ibex-35 yields 0.6% to 8,659 points, with the biggest blow to banks like BBVA, which yields another 2.2%. However, the declines could be even greater were it not for the support that selective yields are finding in Inditex, which is up 1.2% in the early trading stages.
While things could change with the opening of US markets, investors are likely to exercise caution in the face of a full-scale escalation in Treasury bond holdings. It is true that yields (moving inversely with price) are taking a break after the sharp rise recorded after the ECB meeting. But the tension is still palpable in this market.
The monetary organization confirmed it will make its first rate hike in 11 years in July, and investors began selling debt, which put pressure on prices and soared yields, until the German bond was on the brink of collapse. 1.5% to hit. The reference is yielding something up to 1.43% today. In the Spanish case, yields rose 2.66%, showing that the periphery countries are again the ones that will suffer the most if the stimulus is pulled, with a risk premium of 122 basis points.
All this despite Christine Lagarde’s assurances that the ECB is “committed” – a message she repeated several times during her speech – to prevent these regions’ risk premiums from spiraling. But the market is missing details of this plan, so the selling pressure remains strong.
On the other hand, in the commodities market, and in complete escalation of geopolitical tensions, futures for a barrel of Brent crude, a benchmark in Europe, remain above $122, while the US West Texas is around $121.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
