U.K. bond yields spiked higher while Germany’s rose as the Bank of England responded to above 5% inflation with a benchmark interest rate hike while the European Central Bank’s president flagged inflation worries even as it kept rates in negative territory.
The yield on the 10-year U.K. gilt
TMBMKGB-10Y,
rose to 1.34% from 1.26% after the Bank of England made its second consecutive rate increase, taking the bank rate to 0.5%. While the rate hike was not a surprise, markets hadn’t anticipated four members of the nine-member monetary policy committee would support a half-point increase.
The yield on the 10-year German bund
TMBMKDE-10Y,
also gained ground, rising to 0.11% from 0.04% after European Central Bank President Christine Lagarde declined to reiterate her December comment that interest rate hikes this year were unlikely.
Lagarde’s comments evaporated gains for the British pound
GBPEUR,
vs. the euro, while the euro
EURUSD,
rose to $1.1371.
All of the major European stock-market benchmarks were negative in afternoon trade, with the Stoxx Europe 600
SXXP,
slipping 1.2%.
Catering group Compass
CPG,
jumped 8% after reporting a 39% surge in organic revenue growth in its fiscal first quarter.
SKF
SKF.B,
slumped as the Swedish ball-bearings maker reported a core profit below expectations. ING
INGA,
also dropped as the Dutch lender recorded a weaker profit than analysts estimated.
