The German long-term bunds gained on Thursday, tracking U.S trend after dovish March FOMC meeting minutes. The benchmark 10-year bonds yield, which is inversely proportional to bond price fell 12.93 pct to 0.101 pct and 3-year bonds yield dipped 3.74 pct to -0.504 pct 11:00 GMT.
The Fed in its March FOMC meeting minutes indicated that participants agreed that their ongoing assessments of the data and the implications for the outlook, rather than calendar dates, would determine the timing and pace of future adjustments to the stance of monetary policy. Although a range of views were expressed about the incoming information would be sufficient to make an adjustment in April, a number of participants judged that headwinds restraining growth (an holding down the neutral rate of interest) were likely to only subside slowly.
Accordingly, factoring risks to the economic outlook, several participants expressed the view that raising the target range for Fed Funds as soon as April would signal a sense of urgency that they did not think was appropriate. This very much supports the view that rates are likely to move higher over the course of 2016 (most likely beginning in June), though appears to increase the likelihood that the April meeting would see the current “wait and see” approach to monetary policy continue.
The future of the global economy remains uncertain and there are questions about Europe's ability to weather new shocks, the president of the European Central Bank said in its annual report on Thursday.
“2016 will be a no less challenging year for the ECB. We face uncertainty about the outlook for the global economy. We face continued disinflationary forces. And we face questions about the direction of Europe and its resilience to new shocks,” Draghi wrote in the report.
Draghi said the ECB's quantitative easing, where it effectively prints money to buy chiefly state bonds, would boost economic output or gross domestic product in the euro zone by around 1.5 percentage points between 2015 and 2018.
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