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Today’s emergency ECB meeting addresses current market conditions

The European Fear Scale has reached its highest level since 2020
Today’s emergency ECB meeting addresses current market conditions
President of the ECB Christine lagarde

The European Central Bank (ECB) announced an extraordinary meeting on Wednesday, at a time when bond yields for many governments in the euro zone are rising.

This meeting, which was not on the schedule of the ECB program, comes at a time when the Federal Open Market Committee of the Federal Reserve is holding its meetings in Washington, which will conclude today by announcing an increase in federal interest rates at a press conference by Federal Reserve Chairman Jerome Powell on the latest economic and monetary developments.

An ECB spokesperson told CNBC that “the Board of Governors will hold a special meeting on Wednesday to discuss the current market conditions.”

Borrowing costs for many governments have risen in recent days. A measure known as the “European Fear” gage reached its highest level since early 2020. The difference in Italian and German bond yields – which is widely watched by investors – widened the most since early 2020 earlier today.

The yield on Italian 10-year government bonds topped 4 percent earlier in the week.

Moves in the bond market, which highlighted tension among investors, were linked to concerns that the ECB would tighten monetary policy more aggressively than previously expected.

Meanwhile, the ECB failed last week to provide any details on possible measures to support heavily indebted countries, raising concerns among the investment community even more.

However, following today’s announcement, bond yields fell and the EUR rose against the US dollar. The euro was trading up 0.7 percent to $1.04 before the market opened in Europe.