AFP, Paris :
Investors are watching inflation carefully, worried that a boiling over of prices will ruin the expected strong pandemic recovery although analysts believe Europe faces much less of a risk than the United States.
Fears that US President Biden’s $1.9 trillion stimulus plan – which was passed by the House of Representatives on Friday – will stoke up the economy too much have unnerved investors in recent weeks.
A rise in yields on 10-year US Treasury bonds – a key indicator of expectations – shows the markets believe prices are set to rise much more sharply than last year’s gain of 1.4 percent, which could force the US Federal Reserve to hike interest rates earlier than it says it plans to do.
Bond yields have risen elsewhere too, with 10-year French government bonds turning positive on Thursday for the first time in months while the benchmark 10-year German Bund has also risen although it remains negative.
European inflation data for January showed a jump in prices of 0.9 percent compared to a minus 0.3 percent reading in December, as increased costs of raw materials fed through into services and industrial goods.
