Europe’s Bonds Fall as Traders Look to Fed for Policy Signals
- Fed fund futures indicate 67% chance of hike by December
- ‘Hard to see yields go much lower’: Danske’s von Mehren
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European bonds fell, led by declines in U.K. gilts, as investors braced for signals from the Federal Reserve on a tighter monetary policy.
The euro region’s sovereign debt, ranging from core countries including Germany and France to peripherals such as Spain, dropped before the Fed release minutes of its September policy meeting on Wednesday. Traders currently assign about a two-thirds chance of a rate increase by December, based on prices in fed fund futures contracts. This helps weigh on fixed-income securities and comes at a time when speculation is growing that the European Central Bank will be looking to pare back some of its stimulus measures.