On Monday, the interest rate on the Finnish government bond moved close to four percent. The last time the interest rate was over four percent was in the summer of 2009. According to some sources, the investors’ bid rate (bid), i.e. the yield requirement, was already at four percent, but in completed deals the interest rate has still remained slightly below the limit.
At 3:50 p.m., the Finnish government’s ten-year interest rate was 4.3 percentage points higher at 3.956 percent. At its highest, the interest rate has been over 3.98 percent.
Interest rates on government bonds have been rising both in Europe and the United States because of the situation in Iran. President of the United States Donald Trump said on Saturday that he rejected Iran’s proposal to open the Strait of Hormuz for seven days. Iranian Foreign Minister Abbas Araghchi has described Trump’s statements as contradictory. The price of Brent reference oil was up almost three percent in the afternoon at over 107 dollars per barrel. The price traded above $108.80 after midday.
The rise in oil prices and long-lasting high prices raise inflation expectations and thereby also expectations of the central banks’ tight monetary policy.
The rise in interest rates and interest rate prospects has weighed on the price of gold. Gold does not earn interest or other cash flow, so its status as an investment weakens when interest rates rise. The price of gold was down 3.2 percent at $4,149 an ounce in the afternoon.
The German federal government’s ten-year reference bond market rate was 3.3 percentage points higher at 3.631 percent at 3:40 p.m. The interest rate on the equivalent loan in the United States was 5.7 percentage points higher at 5.217 percent.
In two-year loans, the German government bond rate was 4.9 percentage points higher at 3.318 percent, and the US bond rate was 6.2 percentage points higher at 4.912 percent.
Currency movements have remained small. The yen and the pound have strengthened slightly against other major currencies. At 15:30, the euro fetched 1.1375 dollars, 178.61 yen, 0.85785 pounds or 11.320 Swedish kronor. The dollar was 157.01 yen and the pound was 1.3260 dollars. The price of the euro in dollars is moving close to this year’s lowest levels. The rates moved at approximately the same level in June and July as well.