Infineon Plunges 7.6%, European Yields Exceed 2011 Levels, and Eurozone Inflation Surpasses Target
Infineon fell 7.6% amid a broad sell-off in European bonds; Bund yields hit their highest level since 2011, France broke 2008 barriers, and Eurozone inflation exceeded the target at 2.9%.
German semiconductor giant Infineon's stock plunged 7.6% in a session where European markets lost most of their gains, amid a broad sell-off targeting long-term European government bonds across the continent.
The yield on the German 2-year Schatz rose 5 basis points, while medium- and long-term Bund yields reached their highest levels since 2011. The yield on France's 30-year bond broke levels not seen since 2008, while British bond yields approached the 6% threshold.
On the inflation front, Eurozone inflation for July came in at 2.9% annually, exceeding the European Central Bank's 2% target, prompting the bank's chief economist, Philip Lane, to emphasize that "3% is still very high" for the region.
Markets are awaiting a speech tonight by ECB President Christine Lagarde, which is expected to establish the framework through which the path of European interest rates will be interpreted facing a rare combination: above-target inflation, yields at multi-decade highs, and cautious growth slowdown. Europe faces an equation that tolerates no delay in resolution.
What do these terms mean?
Schatz yield: A 2-year German government bond, and a precise measure of near-term Eurozone monetary policy expectations.
German Bund: The benchmark German government bond in Europe, used as a standard for pricing risk in European sovereign debt.
French OAT: The French government bond, and the spread between it and the German Bund measures market confidence in the French economy compared to the German economy.
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