European Bonds Rally as Fed Emphasizes Gradual Rate Trajectory
- Fed increases interest rates while underscoring global risks
- Bonds rise as faltering oil prices weigh on inflation outlook
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European government bonds climbed on Thursday after the Federal Reserve moved away from its record-low interest rates while cautioning that global risks and falling oil prices could keep the pace of further policy tightening slow.
Yields on 10-year sovereign securities from Germany to Spain headed for their biggest declines in more than a week. The Fed increased interest rates for the first time since 2006, lifting the range by 25 basis points to 0.25-0.5 percent on Wednesday. Fed Chair Janet Yellen said the U.S. economy was performing well but transitory forces such as the fall in oil prices were weighing on inflationary pressures. West Texas Intermediate crude approached its lowest price since February 2009.