Report: Eurozone short-term bond yields may have difficulty rising significantly

Niall Scanlon of Mediolanum International Funds stated in a report that after the market has largely digested the expectations of the European Central Bank raising interest rates twice in the near future, "the March meeting may struggle to push short-end yields significantly higher." The fixed income fund manager said that Mediolanum's base case is that ECB President Christine Lagarde will not push back against current market pricing. He said, "However, if the ECB were to emphasize downside risks to economic growth, or hint at being willing to tolerate higher inflation for a period, then yields could potentially fall." He mentioned that Mediolanum's core assumption remains that the ECB will maintain deposit rates at a stable level of 2% for a longer period, although this largely depends on the duration and escalation of the conflict in the Middle East.