Market Comment | Bond yields climbed with ECB rates unchanged

Summary

The ECB decided to keep its rates unchanged although markets were expecting a rate cut as soon as today, leading to an increase in sovereign bond yields and a fall in equity markets during Draghi’s press conference. However, this rise was partially erased as the ECB opened doors to easing by the next meeting in September.

Key points

• Key points:
• Markets expectations for a ECB depo rate cut in September is hovering around 95%.
• The ECB reinforced its forward guidance to say that it expects rates to remain at their present or lower levels at least through the first half of 2020.
• Sovereign bond yields increased during Draghi’s press conference as the ECB stance was less dovish than what markets expected which was pricing a depo rate cut today.

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