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German Bonds Rally, Euro Slips After Eurozone Inflation Slows -- WSJ

The Wall Street Journal · 01/06/2023 07:43
-- The euro retreated, falling 0.3% against the dollar to $1.0488. -- German 10-year Bund yields fell to 2.285%, according to Tullett Prebon data, from 2.318% Thursday. -- The pan-continental Stoxx Europe 600 added 0.2%. Germany's DAX index traded flat.

By Caitlin McCabe

Inflation in the eurozone retreated by more than expected in December, reaching its lowest level since August. But the data wasn't all good news.

Headline annual inflation hit 9.2% in December, the European Union's statistics agency Eurostat said Friday, down from 10.1% in November. Moderating energy prices helped reduce pricing pressures.

But stripping out volatile energy and food prices, December's data showed that consumer-price inflation actually increased to 5.2% in December, up from 5% the month before.

Moves in markets were largely muted after the release of the data. Why? It likely won't alter the European Central Bank's interest-rate trajectory, market watchers say.

"Persistently strong core inflation means the ECB will feel duty bound to press on with its tightening cycle for a while yet," wrote Andrew Kenningham, chief Europe economist at Capital Economics, in a note.

Here's how markets reacted, as of midday in London:

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(END) Dow Jones Newswires

January 06, 2023 07:43 ET (12:43 GMT)

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