Eurozone periphery bonds trade lower as ECB refrains from adding stimulus

The Eurozone periphery bonds plunged Friday as the European Central Bank kept its monetary policy rate and the pace of quantitative easing steady. This decision was widely expected by the market participants and economists.

The French 10-year bond yields, which moves inversely to its price, rose 2-1/2 basis points to 0.186 percent, Irish 10-year bonds yield climbed 1 basis point to 0.423 percent, Italian equivalent ticked 1-1/2 basis points higher to 1.168 percent, Netherlands 10-year bonds yield climbed 2-1/2 basis points to 0.073 percent, Portuguese equivalents inched 3-1/2 basis points higher to 3.098 percent, Spanish 10-year bonds yield bounced 1-1/2 basis points to 1.003 percent by 09:20 GMT.

Thursday's ECB meeting passed without any policy changes or signals, defying expectations of an extension of QE. We now expect that to be announced in December. Also, reaffirmed that urgent pace the quantitative easing will run until at least March 2017. The ECB made few changes to its economic forecasts, leaving its key 2018 CPI forecast at 1.6 percent.

While President Draghi maintained that economic risks remain to the downside, he said growth was steady and the data show 'resilience' (presumably to Brexit). The central bank presumably felt little pressure to act, especially with current inflation running in positive territory. Nevertheless, with even core inflation running at less than half the ECB's target of slightly-below-2 percent its easing bias will remain for some time.

Meanwhile, the pan-European STOXX 600 index was down 0.18 percent and the euro-area blue-chip gauge the STOXX 50 dipped 0.04 percent, the PSI20 Index fell 0.32 percent, the DAX traded 0.17 percent lower and the CAC-40 fell 0.15 percent by 09:20 GMT.