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Eurozone money markets: ECB to fully cut rates by December

Eurozone money markets: ECB to fully cut rates by December

Eurozone financial markets began pricing an intertest rate cut by the European Central Bank in December, as the spread of the coronavirus outside China prompted traders to raise expectations of further stimulus measures by major central banks.

The possibility of an interest rate cut by the ECB in July has risen significantly, climbing to about 70 percent, from 50 percent on Monday. Also, expectations of a cut in interest rate in December meeting has soared.

The wave of coronavirus outbreaks in Italy has raised many economic concerns in the eurozone, with many in the market predicting that Italy will be heading towards recession in the upcoming period due to the virus.

Meanwhile, Asia reported hundreds of cases of new Corona virus (MERS-CoV) on Wednesday, including the first U.S. soldier infected with the virus. For its part, the United States has warned of an inevitable epidemic.

Moreover, a member of the ECB said yesterday that there was currently no need for further monetary policy measures in the face of the coronavirus outbreak.

On the other hand, most of the eurozone’s 10-year bond yields were flat, with German bond yields reaching a four-and-a-half-month low of 0.52 percent.

Yields on 10-year Italian bonds rose nearly 5 basis points, touching a one-month high of 1.04 percent.

As of 10:47 GMT, the euro currency surged against the US dollar at 1.0838 after touching a peak of 1.0897, which is the highest since February 12.

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