ECB rate cuts approaching

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ECB News

Interestrate,Europe,Unitedstates

A backdrop of geopolitical unrest in the Middle East, rising commodity prices and surprisingly strong US data have fuelled rising yields across the globe in the past month.

Shifts in US yields remain the decisive factor for developments. In the space of just one month, the benchmark US 10Y Treasury yield has increased from 4.30% to 4.60%, triggering memories of last autumn, when the same yield peaked a tad above 5%. That being said, we assess the current dynamic to be different to that prevailing in the autumn in several ways.

ECB ready to cut interest rates in June – and the Fed will not change that European yields have experienced a knock-on effect from rising US yields, which in midApril briefly sent the 10Y Bund yield above 2.5%. In contrast to the US, however, markets have had no real reason to doubt that rate cuts are approaching.

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