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The pound strengthened and UK government bonds declined after better-than-expected private sector activity data in the UK led traders to revise their expectations of a rate cut by the Bank of England. The currency rose by as much as 0.7% against the dollar, its largest daily gain in over a month. The increase in the Composite Purchasing Managers' Index suggests that the UK's economic outlook remains positive, reducing the likelihood of monetary policy easing. Traders have been reducing their rate-cut bets since the beginning of the year, and the first rate reduction is now expected to be delayed. [Extracted from the article]

Traders in the world's largest bond markets are scaling back their bets on aggressive interest-rate cuts this year, following warnings from central banks. The Federal Reserve's easing cycle, once seen as certain to begin in March, is now viewed as a coin toss. Similarly, in the UK, bonds have fallen after unexpected inflation acceleration, and European Central Bank President Christine Lagarde has dismissed market bets on significant policy easing as a distraction. Central banks are adopting a cautious tone due to factors such as employment resilience, concerns about sticky price growth, and the risk of underestimating inflation threats. [Extracted from the article]

Traders in major markets are adjusting their expectations for aggressive interest-rate cuts this year in response to warnings from central banks. The UK's surprise acceleration in inflation and better-than-expected US retail sales have prompted traders to reduce their bets on the scale of easing from the Bank of England and the Federal Reserve. Central bankers have been cautious about rate cuts due to concerns about employment, economies, and the potential for stickier inflation. While the rate direction still seems set, the timing and pace of rate cuts are being pushed back. [Extracted from the article]

Traders in major markets are adjusting their expectations for aggressive interest-rate cuts this year, in response to warnings from central banks. The UK's surprise acceleration in inflation has contributed to this shift, with the market now pricing in fewer rate cuts from the Bank of England. Central bankers are exercising caution due to factors such as employment resilience, concerns about sticky price growth, and the scars from recent inflation spikes. While the rate direction still appears to be set, central banks are emphasizing the need for careful consideration before implementing rate cuts. [Extracted from the article]

Norway's central bank has raised its key deposit rate by a quarter point to 4.5% in an effort to strengthen the krone, despite global expectations of easing monetary policy. The decision goes against the trend of other major economies, such as the US Federal Reserve, which is expected to ease policy. The rate hike was driven by concerns about inflation and the weakening krone, which has contributed to imported price and wage pressures. The central bank's forecast suggests that the benchmark rate will remain at 4.5% until autumn 2024 before gradually decreasing. [Extracted from the article]

Norway's central bank, Norges Bank, has raised its key deposit rate by a quarter point to 4.5% in an effort to strengthen the krone. This decision goes against the trend of global markets, which are anticipating rate cuts in major economies. The move is aimed at reducing the risk of high inflation persisting for a long period of time. The decision was unexpected, as only a minority of economists predicted the rate hike. The krone strengthened by as much as 2.2% against the euro following the announcement. [Extracted from the article]

Traders have increased their bets on interest-rate cuts by the European Central Bank (ECB) and the Bank of England (BOE) in the coming year following the Federal Reserve's shift towards looser monetary policy. Markets are now pricing in 157 basis points of ECB easing, indicating the expectation of six quarter-point cuts and a 30% chance of a seventh cut. For the BOE, markets are fully pricing in five quarter-point cuts, up from three earlier in the week. These developments come after the Fed signaled the end of its tightening campaign and projected more aggressive rate cuts in 2024. [Extracted from the article]

Traders are increasingly betting on interest-rate cuts by the Bank of England (BOE) in 2024, following weak GDP data that suggests policymakers will not be able to maintain tight monetary policy for much longer. Markets have priced in three quarter-point cuts, with an 85% chance of a fourth, which would bring borrowing costs to 4.25%. This shift in expectations brings the BOE closer to the Federal Reserve, which is also expected to lower borrowing costs next year. However, some analysts believe that the BOE may wait for further evidence of falling inflation before implementing any easing measures. [Extracted from the article]

Traders are increasingly betting on interest-rate cuts by the Bank of England (BOE) in 2024, following weak GDP data that suggests policymakers will not be able to maintain tight monetary policy for much longer. Markets have priced in 96 basis points of easing, indicating the expectation of three quarter-point cuts and an 85% chance of a fourth, which would bring borrowing costs to 4.25%. This aligns BOE expectations more closely with those for the Federal Reserve, which is expected to lower borrowing costs by at least one percentage point next year. The UK economy contracted more than anticipated in October, setting the stage for continued stagnation through 2024. Wage growth is also slowing, leading some to argue that the BOE has already done enough to control inflationary pressures after a series of aggressive rate increases. The pound fell and UK bonds gained following the release of the GDP data. [Extracted from the article]

The European Central Bank (ECB) is facing pressure from markets to cut interest rates in response to weakening inflation and a feeble economy. Traders are now predicting a rate cut as soon as March 2024, with borrowing costs falling to 2.5% by the end of 2024. However, ECB officials are not rushing to act and are cautious about underestimating inflation again. The ECB's updated forecasts, which will be presented by President Christine Lagarde next week, are expected to have a significant impact on the bank's messaging. Economists warn of the risk of complacency and emphasize the need for caution in response to mounting rate-cut speculation. [Extracted from the article]

The European Central Bank (ECB) is facing pressure from markets to cut interest rates in response to weakening inflation and a feeble economy. Traders are now predicting a rate cut as soon as March 2024, with borrowing costs falling to 2.5% by the end of 2024. However, ECB officials are not rushing to act and are cautious about underestimating inflation again. The ECB's updated forecasts, which will be presented by President Christine Lagarde next week, are expected to have a significant impact on the bank's messaging. Economists warn of the risk of complacency and emphasize the need for caution in interpreting the recent drop in inflation. [Extracted from the article]

The European Central Bank (ECB) is facing pressure from the markets to cut interest rates in response to weakening inflation and a weak economy. Traders are now predicting a rate cut as soon as March 2024, with borrowing costs falling to 2.5% by the end of 2024. However, ECB officials are not rushing to act and are cautious about underestimating inflation again. The ECB's updated forecasts, which will be presented by President Christine Lagarde next week, are expected to have a significant impact on the bank's messaging. Economists warn of the risk of complacency and emphasize the need for caution in interpreting the recent drop in inflation. [Extracted from the article]

The European Central Bank (ECB) is facing pressure from markets to cut interest rates in response to weakening inflation and a feeble economy. Traders are now predicting a rate cut as soon as March 2024, with borrowing costs falling to 2.5% by the end of 2024. However, ECB officials are not rushing to act and are cautious about underestimating inflation again. The ECB's forecasts, which will be presented by President Christine Lagarde next week, will need to reflect the changed economic backdrop and lower outlook for prices. The ECB previously predicted inflation to average 3.2% next year, but November's consumer-price growth of 2.4% suggests that this outlook is becoming obsolete. Some economists have revised their outlooks and are now predicting earlier and deeper rate cuts. However, there are concerns about complacency and the risk of underestimating inflation. The ECB's decision will be influenced by factors such as wage deals, fiscal plans, and the fourth-quarter GDP number. [Extracted from the article]

Investors are predicting that the European Central Bank (ECB) will lead major central banks in interest-rate cuts, with markets fully pricing in six quarter-point rate cuts by the ECB in 2024. This would bring the key rate down 150 basis points to 2.5%. The likelihood of an easing cycle starting in the first quarter of next year has also increased. The view that major central banks will need to ease monetary conditions to support their economies in 2024 has led to a boost in bonds. However, some analysts caution that expectations for rate cuts may be excessive and that central banks may not deliver on these expectations. [Extracted from the article]

Investors are increasingly betting that the European Central Bank (ECB) will lead the world's major central banks in implementing interest-rate cuts. This shift in market sentiment comes after one of the ECB's more hawkish policymakers, Isabel Schnabel, described the slowdown in inflation as "encouraging." Currently, there is a nearly 90% chance that the ECB will begin its easing cycle in the first quarter of next year, with five quarter-point cuts fully priced in and an 80% chance of a sixth reduction. If these predictions are accurate, the ECB will be the first major central bank to cut rates in 2024 and will have the most aggressive easing cycle. However, some experts caution that expectations for rate cuts by central banks globally may be excessive. The Federal Reserve is expected to make its first move in May, lowering rates by 125 basis points, while the Bank of England is currently pricing in three quarter-point cuts starting in June. Rates markets in Australia and New Zealand have also shifted, with Australia now pricing in a better than 75% chance of a cut by mid-2024 and New Zealand seen as likely to reduce its benchmark rate by May. The view that major central banks will need to ease monetary conditions to support their economies in 2024 has boosted bonds, with yields on 10-year US and German bonds down more than 45 basis points in the past month. Schnabel's remarks came after a report showed euro-area inflation slowing to 2. [Extracted from the article]

Investors are increasingly betting that the European Central Bank (ECB) will lead the world's major central banks in implementing interest-rate cuts. This shift in market sentiment comes after one of the ECB's more hawkish policymakers, Isabel Schnabel, described the slowdown in inflation as "encouraging." Currently, there is a nearly 90% chance that the ECB will begin its easing cycle in the first quarter of next year, with five quarter-point cuts fully priced in and an 80% chance of a sixth reduction. If these predictions are accurate, the ECB will be the first major central bank to cut rates in 2024 and will have the most aggressive easing cycle. However, some experts caution that expectations for rate cuts by central banks globally may be excessive. The Federal Reserve is expected to lower rates by 125 basis points in May, while the Bank of England is currently pricing in three quarter-point cuts starting in June. The belief that major central banks will need to ease monetary conditions to support their economies in the coming year has led to a surge in bond prices, with yields on 10-year US and German bonds falling over 45 basis points in the past month. Schnabel's comments came after a report showed that euro-area inflation had slowed to 2.4%, approaching the ECB's 2% target. While Schnabel effectively ruled out another rate hike, she cautioned against making definitive statements about future rate cuts. Some experts, such as strategists at BlackRock Inc., [Extracted from the article]

Fitch Ratings has upgraded Greece to investment grade, giving the nation access to a large investment pool for its bonds. This follows S&P Global Ratings' decision to upgrade Greece in October. Fitch cited Greece's improving debt-to-GDP ratio, solid nominal growth, and a favorable debt-servicing structure as reasons for the upgrade. The move allows Greek bonds to be included in investment-grade-only bond indexes, which are followed by passive investment strategies and funds dedicated to top-quality bonds. Greece's economy is expected to grow by 2.4% this year and 2.9% next year, with the debt ratio declining. [Extracted from the article]

Traders are predicting that the European Central Bank (ECB) will start cutting interest rates earlier than expected next year, due to lower-than-anticipated inflation in the region. Swaps tied to the ECB's meeting dates indicate a quarter-point decrease in the deposit rate is fully priced by April, with a 50% chance of a cut as early as March. Markets are also betting on four quarter-point cuts in 2024, bringing the deposit rate back to 2.75%. However, some officials argue that the battle against inflation is not yet over, and there are risks of inflation exceeding expectations. [Extracted from the article]

Traders are predicting that the European Central Bank (ECB) will start cutting interest rates earlier than expected next year, due to lower-than-anticipated inflation in the region's main economies. The market is now pricing in a quarter-point decrease to the ECB's deposit rate by April, with a 50% chance of a cut as early as March. There is also speculation of four quarter-point reductions in 2024, with a 70% chance of a fifth cut. However, some officials caution that the battle against inflation is not yet over. The ECB's aggressive rate increases are expected to impact economic growth, and the effect of surging energy prices has dissipated. Despite this, bonds have rallied, and there is also an increase in bets on Federal Reserve rate cuts. [Extracted from the article]

Traders are predicting that the European Central Bank (ECB) will cut interest rates earlier than expected next year due to lower-than-anticipated inflation in major European economies. The market now fully prices in a quarter-point decrease to the ECB's deposit rate by April, with a 45% chance of a cut in March. This repricing follows data showing that inflation in France, Spain, and Germany has slowed more than economists predicted. Despite warnings from policymakers that borrowing costs will remain high for a while, there is a growing belief that central banks will unwind their restrictive policies sooner than previously thought. The ECB's aggressive rate increases are expected to negatively impact economic growth, while the effect of surging energy prices following Russia's invasion of Ukraine has diminished. European bonds have gained, and the euro has fallen in response to the data. Market expectations now imply 113 basis points of rate cuts from the ECB by the end of 2024. [Extracted from the article]

Traders are increasingly predicting that the European Central Bank (ECB) will cut interest rates earlier than expected next year, despite warnings from policymakers that rates will remain high for a while. Swaps tied to the ECB's meeting dates indicate that a quarter-point decrease in the deposit rate is now fully priced in by April, compared to the previous expectation of a rate cut in June. This shift in expectations follows data showing lower-than-expected inflation in France and slower consumer price growth in Spain and Germany. However, ECB officials are cautioning that the battle against inflation is not yet over. [Extracted from the article]

Italian bonds are performing worse than their peers as the European Central Bank (ECB) suggests that it may increase the pace of selling debt next year. The yield on Italy's 10-year bond increased more than German bonds after the Bundesbank President stated that the ECB's balance sheet must shrink significantly. Italy's bonds are particularly affected by the ECB's quantitative tightening because they were the main beneficiaries of its debt-buying programs. Analysts and investors believe there is a risk that the central bank will taper reinvestments of its pandemic bond portfolio earlier than expected, which would flood the market with more Italian debt. [Extracted from the article]

With Meloni's coalition government scheduled to present new budget projections on Wednesday, the numbers showcase the challenge as ministers try to square the circle of generous election promises and strained public finances. (Bloomberg) -- Prime Minister Giorgia Meloni is paring back her ambitions to bring Italy's deficit toward the European Union's 3% limit next year, according to people familiar with the matter. [Extracted from the article]

(Bloomberg) -- Prime Minister Giorgia Meloni is paring back her ambitions to bring Italy's deficit toward the European Union's 3% limit next year, according to people familiar with the matter. That's heaped pressure on Meloni as she contends with the demands of a fractious coalition, just as the public finances also suffer from data revisions that changed the treatment of generous tax breaks granted under a previous government. [Extracted from the article]

(Bloomberg) -- The euro was headed for the longest streak of losses since its inception on bets the European Central Bank is done raising interest rates. Traders have been ditching the euro over the past two months on bets the ECB will struggle to tighten monetary policy further amid signs of a worsening economy. [Extracted from the article]

Traders have been ditching the euro over the past two months on bets the ECB will struggle to tighten monetary policy further amid signs of a worsening economy. (Bloomberg) -- The euro was headed for the longest streak of losses since its inception on bets the European Central Bank is done raising interest rates. [Extracted from the article]

(Bloomberg) -- A year-long rally in Italian government bonds has run its course and the debt's risk premium will surge back to levels seen at the start of 2023, according to Morgan Stanley strategists. Morgan Stanley also expects ECB policymakers in December to announce the end of reinvestments in its pandemic emergency purchase program, under which Italy has been one of the biggest beneficiaries. [Extracted from the article]

(Bloomberg) -- A year-long rally in Italian government bonds has run its course and the debt's risk premium will surge back to levels seen at the start of 2023, according to Morgan Stanley strategists. Morgan Stanley also expects ECB policymakers in December to announce the end of reinvestments in its pandemic emergency purchase program, under which Italy has been one of the biggest beneficiaries. [Extracted from the article]

The surge in gilt yields also comes after sticky UK inflation and strong wage data boosted investor bets that the Bank of England will need to raise interest rates further to 6% and keep them high for longer. (Bloomberg) -- UK government bonds slid to send benchmark yields to the highest since 2008, on concerns major central banks will continue to raise interest rates to quell inflation. [Extracted from the article]

(Bloomberg) -- UK government bonds slid to send benchmark yields to the highest since the financial crisis, on concerns major central banks will continue to raise interest rates to quell inflation. The surge in gilt yields also comes after sticky UK inflation and strong wage data boosted investor bets that the Bank of England will need to raise interest rates further to 6% and keep them high for longer. [Extracted from the article]

(Bloomberg) -- UK government bonds slid to send benchmark yields to the highest since the financial crisis, on concerns major central banks will continue to raise interest rates to quell inflation. The surge in gilt yields also comes after sticky UK inflation and strong wage data boosted investor bets that the Bank of England will need to raise interest rates further to 6% and keep them high for longer. [Extracted from the article]

(Bloomberg) -- The yen fell to the weakest against the euro since 2008 on Thursday, extending losses after tame US inflation data and putting traders on guard for jawboning from Japanese officials. The currency set fresh session lows against the euro, falling as much as 0.9% to 159.21, after US consumer pricing data strengthened bets that the Federal Reserve will hold rates steady at its September meeting. [Extracted from the article]

The currency set fresh session lows against the euro, falling as much as 0.8% to 158.96, after US consumer pricing data affirmed that the Federal Reserve could hold rates steady at its September meeting. (Bloomberg) -- The yen fell to the weakest against the euro since 2008 on Thursday, extending losses after tepid US inflation data and putting traders on guard for jawboning from Japanese officials. [Extracted from the article]

(Bloomberg) -- The yen fell to the weakest against the euro since 2008 and neared a key level against the dollar, putting traders on guard for jawboning from Japanese officials, ahead of the release of potentially market-moving US inflation data Thursday. Read more: Yen Challenge for BOJ Persists Even After Ueda's Rare FX Warning A recent policy adjustment by the Bank of Japan, which allowed benchmark 10-year rates to move up toward 1%, has provided little support to the currency. [Extracted from the article]

(Bloomberg) -- Italy's growth prospects may soon face scrutiny from investors unsettled by this week's government assault on banks, according to Katharine Neiss of PGIM Ltd. The fund-management firm's chief European economist told Francine Lacqua on Bloomberg Television that she's been "very positive" on the euro zone's third-biggest economy, though potential dangers are lurking. [Extracted from the article]

(Bloomberg) -- By some measures, the euro is at its most expensive level on record, potentially setting itself up for a fall if starts to undermine the euro area economy and forces the European Central Bank to turn dovish. - Vassilis Karamanis, FX strategist Currency strength may feature in the ECB's messaging this week, according to John Hardy, head of FX strategy at Saxo Bank. [Extracted from the article]

Feijoo has pledged to overhaul windfall taxes on banks that were put into place by the Sanchez government as a way to raise money during the cost-of-living crisis. (Bloomberg) -- As Spanish voters get ready to head to the polls, investors are putting their focus on the pro-business policies of conservative frontrunner Alberto Nunez Feijoo. Energy Regulation If Feijoo's center-right People's Party wins, there may be less government intervention in the electricity market, according to Morgan Stanley. [Extracted from the article]

Much of that money has gone into government bonds, because some investors expect that much more will flow in, raising prices, once Greece regains investment-grade status. (Bloomberg Businessweek) -- As Greece prepares for what's expected to be a record influx of sun-seeking tourists, it's also welcoming visitors of a different sort: deep-pocketed foreign investors who abandoned the country after its default more than a decade ago. [Extracted from the article]

(Bloomberg) -- A growing chorus of strategists is telling clients to buy Spanish government debt ahead of Sunday's national election, arguing the bonds will catch up with gains in its main euro-area peers once the political noise dissipates. Morgan Stanley, Barclays Plc and Citigroup Inc. are among those highlighting the nation's bonds are cheap after months of underperformance, saying election risks are overdone. [Extracted from the article]

(Bloomberg) -- Bonds rallied for a second day as traders bet an aggressive streak of global interest-rate hikes is close to ending, bolstered by optimism inflation in the world's biggest economy will continue to slow. "The bond rally currently has a strong momentum, which may bring some extension of the moves", said Evelyne Gomez-Liechti, a rates strategist at Mizuho. [Extracted from the article]

(Bloomberg) -- Bonds rallied for a second day as traders bet an aggressive streak of global interest-rate hikes is close to ending, bolstered by optimism inflation in the world's biggest economy will continue to slow. Traders are no long fully pricing another 50 basis points of hikes for the European Central Bank. [Extracted from the article]

Traders are no long fully pricing another 50 basis points of hikes for the European Central Bank and erased bets on the Bank of England taking the key rate to 6.5%, seeing a peak of 6.25% instead. (Bloomberg) -- Bonds rallied for a second day as traders bet an aggressive streak of global interest-rate hikes is close to ending, bolstered by optimism inflation in the world's biggest economy will continue to slow. [Extracted from the article]

(Bloomberg) -- UK wages rose more than expected to a level that Bank of England Governor Andrew Bailey said is fueling inflation, maintaining pressure for higher interest rates. Did the market have too much priced expecting rates to get to 6.5%?" The BOE was forced to step up the pace of its interest rate rises last month after much stronger than expected labor market and inflation data. [Extracted from the article]

Official data is expected to show inflation slowed to its lowest in 14 months, while investors are pricing in a 13th consecutive rate hike from the BOE to bring wage-price pressures under control. What Bloomberg Economics Says... "There is some speculation among investors that a string of hotter-than-expected pay and inflation data could prompt the Bank of England to opt for a 50-basis-point hike at its June meeting. (Bloomberg) -- Britain's bond market is approaching an inflection point, with inflation data and a Bank of England decision set to shape the outlook for traders after yields rose to the highest level since 2008. [Extracted from the article]

Money-market traders reacted by increasing their rate-hike expectations, implying an almost 80% probability of the ECB raising rates to 4% by October, up from 50% before the decision. (Bloomberg) -- The euro gained more than 1% and regional government bonds slumped as traders increased bets the European Central Bank will raise interest rates after officials hiked and signaled more to come. [Extracted from the article]

Money-market traders reacted by increasing their rate-hike expectations, implying an almost 80% probability of the ECB raising rates to 4% by October, up from 50% before the decision. (Bloomberg) -- The euro gained and government bonds extended losses as traders increased bets the European Central Bank will raise interest rates to 4% after officials hiked and signaled more to come. [Extracted from the article]

(Bloomberg) -- Central banks will be more hamstrung about how much they can do to boost growth if inflation remains sticky, according to JPMorgan Asset Management. Karen Ward, the firm's chief markets strategist for EMEA, said investors were too optimistic to think central banks would cut interest rates to support growth. [Extracted from the article]