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German bonds: price losses – yield rises to one-month high

Wednesday, 12/22/2021 6:18 PM from

dpa-AFX

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FRANKFURT (dpa-AFX) – German government bonds came under pressure again on Wednesday. Traders pointed to the friendly stock markets and rising inflation expectations. The trend-setting futures contract, the Euro Bund Future, fell by the afternoon by 0.10 percent to 173.14 points. In return, the yield on ten-year Bunds rose to minus 0.29 percent. At times, the highest level in almost a month was reached at 0.27 percent.

Market participants referred to the good mood on the stock exchanges as the reason for the lower demand for safe investments. In addition, there were higher inflation expectations, which have recently been fueled primarily by rising natural gas prices. “Just in time for the beginning of winter, Russia stopped its gas delivery to Germany via the Yamal pipeline,” said Dekabank analysts. Most recently, the pumping direction was even reversed from Germany to Poland.

The development pushed the European natural gas prices up sharply on Tuesday. Higher raw material prices are often quickly reflected in higher inflation expectations, which usually results in higher capital market interest rates. Inflation is already unusually high. The main reasons are corona-related bottlenecks in world trade, which are unlikely to go away anytime soon, and significantly increased prices for various raw materials.

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