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Thursday, 12 November 2015 18:30

Gap between 5-year U.S. and euro zone bond yields hit its highest

A signal from European Central Bank president Mario Draghi that further policy easing is coming next month drove European markets on Thursday, sparking a brief rebound in stocks and pushing the euro and bond yields lower, Caspian Energy News ( reports with reference to Reuters.

In an address to the European Parliament Draghi said inflation dynamics had somewhat weakened and that a “sustained normalization” of inflation could take longer to achieve than thought.

“At our December monetary policy meeting, we will re-examine the degree of monetary policy accommodation,” Draghi said.

Stocks reversed earlier losses, although high-profile corporate profit warnings eventually weighed on sentiment, while the euro sank half a percent below $1.07 and the gap between 5-year U.S. and euro zone bond yields hit its highest since 1999.

“It now seems likely that the present stimulus program could be extended beyond September 2016 and the specter of negative rates could well be imminent,” said Brenda Kelly, head analyst at London Capital Group.

“As we have come to expect from the head of the ECB, Draghi is leaning towards pro-action rather than reaction,” she said.

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