New data on inflation and business confidence out of Germany sent government bond yields in the Eurozone higher on Tuesday. Energy prices on the rise and strong business activity sent inflation in Germany up by 0.5 percent in April, which was considered to be an indication that inflation in the rest of the region might also be up. Higher inflation is expected to spur the European Central Bank to raise interest rates to 2.5 percent soon. Additionally, the IFO business confidence index in Germany was up to 105.9, from 105.4 last month. The index had been expected to decline to 104.8.

In late afternoon trade, the ten-year Bund had added 6.3 basis points to a yield of 3.989 percent, while the two-year Schatz was yielding 3.371 percent, a gain of 6.2 basis points.

Tags: ECB: European Central Bank News by Brian Turner
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In the Eurozone on Thursday, yields on government bonds were down and prices rose after the president of the European Central Bank made comments to the effect that the Bank has no intention of raising interest rates in May, contrary to the expectations of many analysts. The remarks came after the Bank voted to leave interest rates at their current level of 2.5 percent.

Yields had risen almost 5 basis points to 2.887 percent on ten-year bonds before the rate decision was announced. After the decision and remarks, the yield on the ten-year Bund dropped significantly, although by afternoon it was still up 1.7 basis points to 3.855 percent. Yields on the two-year Schatz were down by 2.3 basis points to 3.274 percent.

Tags: ECB: European Central Bank News, European Economy News by Brian Turner
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The euro weakened on Thursday after the European Central Bank voted to keep interest rates at 2.5 percent. While some analysts still expect a rate increase in May, the president of the ECB made comments after the decision that indicated that the Bank is not leaning in that direction. Some analysts responded by saying that while a May increase seems unlikely, there will probably be a hike in June. Other analysts are standing by their predictions of a move in May, basing their opinions on available data.

The single currency was up to $1.2333 against the US dollar, a seven-month high, and at ¥144.92 against the Japanese yen, before the Bank’s decision was announced. After the news, the euro dropped 0.4 percent in relation to the dollar, to $1.2219 and declined by 0.3 percent versus the yen to ¥143.88

In the UK, where the Bank of England also voted to keep interest rates at their current level of 4.5 percent, sterling added 0.5 percent versus the euro to £0.6979 after having dropped to £0.7021 against the shared currency, a fifteen-month low.

Tags: Exchange Rates News by Brian Turner
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The European Central Bank chose to keep interest rates at their current levels in a meeting on Thursday. The decision was expected, but many analysts believe that the ECB will raise rates next month, despite comments to the contrary from the president of the ECB.

In the Eurozone, interest rates remained at 2.5 percent, but some analysts expect that by the end of the year it will have risen to 3.5 percent. This expectation is based on data showing that the region’s economy is recovering and business confidence is growing. The Purchasing Managers Index was at 58.2 in March, the highest it has been since September 2000, companies have increased capital spending, and various measures indicate that economic growth in the first three months of this year is at 0.7 percent. Less optimistic data includes the fact that unemployment remains high - 9.1 percent in Germany and 8.9 percent in France - and the decline of retail sales by 0.2 percent in February.

Tags: Interest Rates News, ECB: European Central Bank News by Brian Turner
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