The euro hardly budged on Tuesday. The common currency was listed at $ 1.1535 in the evening. Emphasis was placed on the economic expectations of the Mannheim ZEW Institute. The rating barometer for the next six months fell from 4.2 to 22.3 points in October, for the fifth time in a row. “The economic outlook for the German economy has deteriorated significantly,” said ZEW chairman Achim Wambach.
Rising oil prices have created uncertainty. The price of US flagship-grade WTI was close to $ 81 per barrel, marking a seven-year high. Oil producers are struggling to recover from massive cuts during the coronavirus pandemic. Due to the drastic rise in gas prices, oil will also be used more and more as a source of energy, which will additionally fuel demand, the brokers explained. “The markets had the message that inflation was temporary, they believed it and are now questioning it,” said Sarah Hewin, economist at Standard Chartered. Fears were fueled by a surge in wholesale prices in Japan to a 13-year high. In the German wholesale trade, selling prices rose more sharply in September than in more than 47 years. “This is part of a phenomenon that we are seeing around the world, and that is fears that inflation will continue to rise due to rising energy prices,” said Shane Oliver, chief economist. at AMP Capital in Sydney.
Investors feared that rising inflation would put pressure on the US Federal Reserve to raise interest rates sooner. This put the bond market under renewed pressure. In turn, US two-year bond yields rose 0.36%, their highest level in over 18 months. The yield on ten-year government bonds climbed to minus 0.081%.