European bonds traded on the first day of the year with yields remaining high.

Pressure from the ECB for larger interest rate hikes, coupled with developments on the pandemic front in China, is creating a negative market climate.

Member of the Board of Governors of the European Central Bank, Joachim Nagelsaid on Monday that additional measures are needed to contain price hike expectations and bring inflation back to the 2% target.

According to the German central bank, the ECB should not hold back on the pace of the next increase in interest rates (each time by 0.5%) in order to reduce the risk of a recession.

After raising interest rates by 250 basis points in four months, the European Central Bank, despite signs that inflation has peaked, admits it fears the scenario will remain high for too long.

For his part, the head of the ECB Christine Lagarde warned a few days ago that interest rates would continue to rise to keep inflation from settling at a high level. “This process is critical because consolidating inflation at a high level will be much worse for the economy,” she said in an interview.

Today, 30 million euros worth of transactions were recorded in HDAT, of which 16 million euros were related to purchase orders.

Greek 10-year bonds yielded 4.74% compared to 2.44% for the corresponding German bonds, resulting in a spread of 2.30%.

On the foreign exchange market, the euro is declining against the dollar, as the European currency traded at $1.0665 in the morning from the $1.0670 level at which the market opened.

The indicative euro/dollar rate announced by the European Central Bank was $1.0683.

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