The euro was stronger and the yield on the 2-year German bund surged after European Central Bank officials talked up the possibility of rate hikes as early as July. Luis de Guindos, vice president of the ECB, said, “from today’s perspective, July is possible and September, or later, is also possible,” while Governing Council member Pierre Wunsch told Bloomberg News said it’s a “no brainer” to take rates to zero, or even positive territory, by the end of the year, unless the economy suffers a severe shock. Since the main ECB rate is negative 0.5%, taking rates to positive territory implies three hikes by the end of the year. The yield on the 2-year German bund rose 11 basis points to 0.16%, while the euro rallied 0.6% to $1.0924.
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