European Bonds Post Worst January on Record Amid Political Angst
- Accelerating inflation prompts bets for ECB ending stimulus
- Old Mutual shifts short positions to peripherals from Germany
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Euro-region bonds handed investors the worst start to a year on record as heightened political risk across the currency bloc added to speculation the European Central Bank may bring its asset-purchase program to an abrupt halt in 2018.
With general elections scheduled in France, Germany and the Netherlands this year amid an increase in support for anti-euro rhetoric, yields on French and Italian bonds climbed this week to their highest level relative to benchmark German debt since 2014. In the face of stronger growth and rising inflation, some investors aren’t listening to Mario Draghi when he says the ECB hasn’t considered tapering its bond-buying plan.