The European bonds were trading mixed on Tuesday as investors await for Federal Reserve’s monetary policy meeting and Federal Reserve Chair Janet Yellen’s speech in an attempt to estimate the Fed's likely next step to raise interest rate. The benchmark German 10-year bonds yield, which is inversely proportional to bond price rose 1.12 pct to 0.272 pct, French 10-year bunds yield dipped 0.23 pct to 0.69 pct, British equivalents jumped 0.87 pct to 1.624 pct, Spanish 10-year bonds yield inched up 1.16 pct to 1.664 pct and Portuguese 10-year bonds yield fell 0.90 pct to 3.293 pct, Netherlands 10-year bonds yield inched higher 0.42 pct to 0.481 pct by 0855 GMT.
According to Reuters sources, German parliament wants to invite Draghi to explain the ECB's ultra-low interest rates and expansionary monetary policy. The meeting with members of the committee on Europe, budget and finance would take place after the summer recess which ends on 5 September.
The European bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the European Central Bank's target. Today, crude oil prices rose by tracking weak greenback and stream on fresh liquidity into the market. Meanwhile, Crude oil prices continue to rover around 5-month high. The International benchmark Brent futures rose 0.52 pct to $44.55 and West Texas Intermediate (WTI) climbed 0.59 pct to $42.89 by 0855 GMT.
On last Thursday, the ECB Governing Council decided to keep its monetary policy stance unchanged. Additional easing measures were not discussed at the meeting, but the Governing Council left no doubt to act immediately by using all the instruments available within its mandate if new downside risks to the outlook for price stability should arise. Therefore, the easing bias remains unchanged in place. The key ECB interest rates remained on hold and are expected to stay at current or even lower levels for an extended period of time, and well past the horizon of the ECB's net asset purchases. As regards helicopter money, ECB President Draghi pointed out that this instrument is fraught with operational and legal difficulties. In response on the recent criticism on the current monetary policy stance the Governing Council unanimously stressed that the ECB is independent and is acting according to its mandate. With no hints that another review and reconsidering of the monetary policy stance at the June meeting is necessary, the introduction of additional easing measures in that meeting is unlikely.
The markets in the Euro zone will now focus on Consumer Price Index (CPI), Q1 GDP and March unemployment rate to be released on Friday (0900 GMT). The investors will also look forward to next week’s FOMC meeting on Wednesday, 27th April.
Meanwhile, the pan-European STOXX 600 index rose 0.52 pct and the euro-are blue-chip gauge, the STOXX 50, jumped 0.51 pct. The FTSE 100 Index is up 0.35 pct, the DAX trading 0.31 pct higher and the CAC-40 climbed 0.15 pct by 0900 GMT.
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