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Euro-Area Bonds Rally With ECB Rate-Hike Bets for 2022 on Ice

  • Traders push back bets for first ECB rate hike to March 2023
  • Italy debt leads rally as traders assess risks to growth
Updated on

Government bond surged across Europe on Tuesday as rates traders bet the European Central Bank will put off raising interest rates until March next year given the risk that Russia’s invasion of Ukraine poses to the growth outlook.

The repricing comes as investors come to terms with the fallout and assess the prospect of a longer period of exceptionally accomodative monetary policy. Governing Council member Olli Rehn said the central bank shouldn’t exit stimulus measures before gauging the impact of the war, compounding the move.