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2026-02-20 17:37:05
[Euro and Eurozone Bond Yields Continue to Fall, Strong PMI Fails to Reverse Market Sentiment] ⑴ The Eurozone's composite Purchasing Managers' Index (PMI) rose to 51.9 in February, higher than the expected 51.5, marking the 14th consecutive month of expansion. PMI data from both France and Germany exceeded expectations, indicating that the recovery momentum of Europe's two largest economies is building. ⑵ However, the strong data failed to reverse the weakness of the euro and Eurozone bond yields. The euro fell 0.1% to $1.1760, essentially unchanged from before the data release. The market's muted reaction to the positive news reflects that exchange rates are currently more driven by external factors. ⑶ European government bond yields continued to fall, stabilizing only after a slight narrowing of the decline. The yield on 10-year German government bonds fell 0.3 basis points to 2.741%, while the yield on French bonds of the same maturity fell 0.6 basis points to 3.311%. The bond market's reaction to the better-than-expected PMI was also limited. ⑷ The market's indifference to the data may stem from a cautious assessment of inflation and policy prospects. Despite positive growth data, price signals remained muted, and corporate price increases were limited, failing to alter market expectations that the European Central Bank would maintain interest rates unchanged this year. (5) The synchronized weakening of the euro and European bonds reflects that the market is still digesting external variables. The dollar's performance, energy prices, and changes in global risk appetite may have a greater impact on the pricing of European assets than short-term fluctuations in regional economic data.
