Interest rate environment
Yield on ten-year Federal bonds / % | 2022 | 2021 | Change (percentage points) |
Average yield | 1.19 | –0.31 | +1.50 |
Highest yield | 2.57 | –0.06 | +2.63 |
Lowest yield | –0.19 | –0.62 | +0.43 |
Year-end yield | 2.56 | –0.18 | +2.74 |
Source: Thomson Reuters
With sharp increases in inflation rates, the world’s leading central banks significantly tightened their interest rate policy in 2022. The European Central Bank has increased its main refinancing rate from 0.0% to 2.5%. In addition, the central banks began to phase out the various bond purchase programs, which led to a decline in demand for bond issues. As a result and due to inflation expectations, capital market yields rose sharply. As a result of significantly stronger movements in the short-term range, yields for short and medium-term bonds were above those for long-term euro bonds.
