Euro-Area Bonds Rise as Commodities Slide Dims Inflation Outlook
- Oil slips from highest in three weeks, supports bonds
- European markets resume trading, U.K. closed for holiday
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Euro-area government bonds advanced as falling commodity prices weighed on the outlook for consumer-price growth, boosting demand for fixed-income assets.
The decline in commodity prices since May makes it increasingly challenging for the European Central Bank to achieve its inflation goal of just below 2 percent. This may underpin the ECB’s quantitative-easing program and support sovereign bonds. West Texas Intermediate crude slid from its highest level in three weeks and Brent, the benchmark for more than half the world’s oil, is poised to end 2015 with the lowest annual average price in 11 years. Inflation erodes the value of the fixed-income payments offered by bonds.