US Treasury Move Eases Pressure on Eurozone Bond Markets
The US Treasury's move to increase liquidity operations has had a ripple effect on global bond markets. Eurozone government bond yields have edged lower, following cues from the US decision aimed at supporting long-dated coupon securities and easing pressure in longer-maturity debt markets.
The rise in longer-term yields has raised concerns among investors about financial conditions and borrowing costs. In the US, total government debt has exceeded $40 trillion, with a debt-to-GDP ratio of around 120%. By contrast, Eurozone government debt stands at roughly 89% of GDP.
Despite the decline in bond yields on Thursday, market expectations for an ECB rate increase remain close to their highest levels since the start of the Middle East conflict. Money markets are fully pricing a deposit rate of 2.75% by March next year, reflecting expectations that inflationary pressures could remain persistent and limit the European Central Bank's ability to ease monetary policy.