The government bond yields of the eurozone measured at record lows on Wednesday, while the euro slipped to its weakest level in a year against the US dollar as expectations of corrective measures from the European Central Bank grew further.
The prospects of further stimulus to counter lower pace of growth and sluggish inflation rate in the eurozone, through an asset-buying program called quantitative easing, buoyed the stock markets. The European shares were up again, building on two days of strong profit, while the Wall Street was expected to open higher.
Amid the speculation over ECB easing its policies looms large, Italian Economy Minister Pier Carlo Padoan fuelled it further saying Italy must lower its growth forecast for 2014.
The bond yield at the benchmark German Bund DE10YT=TWEB dropped about four basis points to a record low of 0.909 percent. The falling trend of yields was felt across the eurozone.
The inflation data of eurozone due on Friday is expected to slip to a new low for this cycle of just 0.3 percent and mount pressure on the ECB to act urgently.
ECB President Mario Draghi has last week called for more action in both fiscal and monetary policy. The corrective measures is by the ECB is likely to arrive soon as the central bank’s next policy meeting on September 4 is approaching.
The euro slipped to an 11-month low of USD 1.3152 EUR= in Asian trade on Wednesday.
Analysts say more liquidity flow into Europe would probably facilitate the emerging markets to boom.