Kornelius Purps Quotations

The substantial upward revisions of the staff forecasts imply more rate hikes to come. The market is absolutely right to price in a June rate hike.

These somewhat disappointing figures might remind investors that not everything is bright in the euro zone. The long end has seen its yield highs.

With Italy's history of more than 50 different governments since World War II, it's hard to believe that a government with such a tight majority will have the mandate to implement the structural reforms demanded by the rating agencies.

What we are seeing currently is that it's not a one-way road for strong economic data. Ten-year yields could fall to 3.35 percent in a month.

The Fed will definitely be raising the rate at the end of this month, and it's certainly possible we'll get a second rate increase later. With some supply pressure, that will also lead to higher yields.

The central bank is very likely to send a stronger message that rates are going up in the near future, because the economic outlook is getting brighter. This will put downward pressure on the bond market.

We had positive inflation data out of Europe, and the U.S. as well. It's the starting point for yields to come down again.

Assume that a time machine is beaming you back to Monday morning. You start the week with the impression of an unexpectedly strong 274k US payroll report in mind. In addition, a clairvoyant tells you that: 1) US retail sales surged by 1.4% m-o-m in April, 2) German growth advanced by 4% q-o-q annualized in Q1 2005, 3) speculation about a revaluation of the Renminbi will intensify, 4) the oil price will fall by about USD 3.50 per barrel this week, 5) and the US Treasury will sell USD 51 bn in Treasury Notes. You make up your mind and conclude that in this environment yields need to go up. At least 99 out of 100 market participants with the same information would have shared your view. But reality is different. Yields are down and down and down again. These are Schwarzenegger markets, no one can beat them.

In the near term, the gilt market will react to any economic data release that helps shape investors' BOE view. The annual growth figure was lower than expected, showing continuation of declining growth.

This is a warning that sentiment developments aren't a one-way street, and we may have reached a peak. With the help of ZEW, prices should find a floor and shouldn't drop in the very short term.