Azernews.Az

By Bloomberg

European government bonds from Germany to Italy declined, trimming their monthly gains, as a key measure of inflation accelerated.

Core euro-zone inflation, which is stripped of volatile elements such as food and energy, unexpectedly quickened to 1 percent in July, the fastest pace in 15 months. Italy’s 10-year bonds were still set for their best month since 2013 as sliding commodity prices and slowing consumer-price growth in some European countries boosted speculation central bankers will maintain their stimulus program.

“After days and days of falling oil prices and declining inflation expectations, we got this higher-than-expected core inflation reading,” said Luca Cazzulani, senior fixed-income strategist at UniCredit SpA in Milan. “While it’s still fairly low, it was a good excuse to sell to make some profit.”

Germany’s 10-year bund yield rose four basis points, or 0.04 percentage point, to 0.69 percent as of 12:15 p.m. London time, leaving it seven basis points lower on the month. The 1 percent security due August 2025 dropped 0.39, or 3.90 euros per 1,000-euro ($1,098) face amount, to 102.99.

Similar-maturity Italian bond yields climbed as much as four basis points, before erasing that increase to leave them little changed on the day at 1.82 percent. They tumbled 50 basis points in July, the most since April 2013.

Strategists surveyed by Bloomberg had predicted core inflation would remain at 0.8 percent. The headline annual consumer-price growth measure was unchanged at 0.2 percent, as forecast.