LONDON, August 21 (Reuters) – Any assumptions respect to the timing of a rise in interest rates by the Federal Reserve were to emerge during the forum of central banks in Jackson Hole could fuel fears of a decline in demand for government bonds of the periphery of the euro. But those who held these bonds should be reassured by the low correlation between the yields on Italian and Spanish government bonds than the American counterpart. The annual symposium of the major global central bankers, which kicks off today, has always been closely monitored for the signs that provides about the next monetary policy moves. In particular, the number of speech one of the Fed’s Janet Yellen, dedicated to the dynamics of the labor market, will be sifted for signs compared to the time that the American Institute intends to follow to raise interest rates, a decision that will have global repercussions. The International Bank for regulations and other institutions have reported as the massive purchase of high yield and low-rated in recent years may have created a bubble that could burst when the cost of borrowing will continue to rise. In the euro zone, where the ultra-expansionary monetary policy has pulled the plug on the sovereign debt crisis, these concerns are concentrated on Italy and Spain, countries “too big to save “, whose borrowing costs have come down with a decision from 2012. According to the estimates of market players, a rise in interest rates by the Fed will push up yields Americans, but this will drag in the same direction as the yields of bonds of euro zone countries? The historical correlations between the two markets show that the German debt is particularly sensitive the movement of American Treasuries, while the Italian and Spanish bonds are little touched. For the graph click link.reuters.com/jyw62w Read more …
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