On Friday, Oct. 22, at the European government bond market dominated mixed feelings. The third consecutive day, market participants are often selective interes3D to debt obligations of the leading European countries. Most of the trading session, players will get rid of short-term government bonds of Germany and France, buying long-term securities. As for the British debt, the purchase of their morning to the middle of the day gave way to sales, and as a result of British Gilts closed the day with a very noticeable drop in the price.
Significant influence on the mood of investors towards the German Bunds has output report IFO Institute in Munich on the studies of business activity in Germany in October this year. The research results have witnessed a sudden surge of optimism in business circles of Germany. The index of business activity (IFO Business Climate) in October rose to mark the September 106.8 points to 107.6 points, while analysts forecast a decline to 106.5 points. Increased compared with the previous month and the index of business valuation to date (IFO Current Assessment), and greater than expected - with 109.8 points to 110.2 points (projected to increase to 110 points). More significant was the growth index of business expectations for the next six months (IFO Expectations) - from the previous level of 103.9 points to 105.1 points against the expected decline to 102.9 points. Such a large surge of optimism in the mood of the German business community was not observed for three and a half years. Obviously, the slowdown in the German economy will not be as significant as experts predict. At least in business circles of Germany, there is no hint of the anxious expectations of economic decline. A recent German economic indicators speak only in favor of the fact that the recovery continues, despite the pessimistic forecasts of slowing global economy.
"Such a strong burst of optimism not seen for three and a half years. This suggests that the slowdown might not be as great as predicted by most analysts," - commented the results of studies IFO chief economist Gernot Nerb.
The fact that a leading European economy continues to successfully recover evidence and released on the eve of an increase in industrial production in October this year. The global financial crisis recedes, and the government should take care of folding strategy stimulates the economy measures, said two days ago, German Chancellor Angela Merkel.
The call for cuts in economic stimulus sounded again from the lips of British economist - a member of the governing board of the Bank of England, Andrew Sentance. "The global economy recovers, and growth in the UK over the past year amounted to 2,5%. We do not need as many incentives," - said E. Sentance, once again defending his position gradually raising interest rates.
Formation of a stable mixed dynamics continued throughout the trading session - German and French bonds with duration of one to six years, closed the day with a slight drop in price, while long-term securities eurozone and British Gilts were at the end of the day were worth considerably less. Yield two-year German Bunds have not changed, but a decade - has increased by 1 bp The spread between them has narrowed from 148 to 147 bp
