Eurozone periphery bonds slump on Fed rate hike hopes

The Eurozone periphery bonds slumped Monday after hawkish comments from Federal Reserve Chair Janet Yellen kept the door open for the US interest hike by end 2016.

The French 10-year bonds yield jumped nearly 6 basis points to 0.204 percent, Irish 10-year bonds yield rose 1-1/2 basis points to 0.451 percent, Italian sovereign bond inched 3-1/2 basis points higher to 1.155 percent, Portuguese equivalents ticked 5 basis points higher to 3.064 percent, Netherlands 10-year bonds yield bounced 4-1/2 basis points to 0.056 percent, Spanish 10-year bonds yield climbed 3 basis points to 0.954 percent by 11:00 GMT.

At the Jackson Hole Symposium, Yellen said that the FOMC continues to anticipate that gradual increases in the federal funds rate will be appropriate over time to achieve and sustain employment and inflation near our statutory objectives.

She further added that in light of the continued solid performance of the labour market and the Fed’s outlook for economic activity and inflation the case for an increase in the federal funds rate has strengthened in recent months. However, Yellen furthered that of course, the Fed’s decisions always depend on the degree to which incoming data continues to confirm the Committee's outlook.

Meanwhile, the pan-European STOXX 600 index was down 0.44 percent and the euro-area blue-chip gauge, the STOXX 50 dipped 0.81 percent. The DAX trading 0.68 percent lower and the CAC-40 tumbled 0.89 percent by 11:00 GMT.