Aurelia Butler

Short-term government borrowing costs in the eurozone shot to an eight-year high on Thursday after central bank officials said they could raise interest rates as soon as July.The yield on Germany’s two-year bond — a benchmark for the entire euro area that closely tracks expectations of the path of European Central Bank interest rates — climbed as much as 0.13 percentage points to 0.18 per cent, its highest level since 2014. It later trimmed some of those gains to trade at 0.13 per cent. Longer-dated bonds were also hit, with Germany’s 10-year yield adding 0.03 percentage points to 0.89 per cent in afternoon trading.The moves came after ECB vice-president Luis de Guindos said in an interview with Bloomberg that the central bank’s first interest rate rise since 2011 could come as soon as July. His colleague Pierre Wunsch said in a separate Bloomberg interview that the ECB could lift policy rates above zero before the end of 2022, bringing eight years of sub-zero rates in the eurozone to an end.The shift in communication has shaken markets that, as recently as the start of the year, were expecting the ECB to move more slowly in tightening monetary policy than its counterparts in the UK and the US.“Four months ago, [Christine] Lagarde said it was very unlikely that they’d raise rates in 2022 and now we have . . . governors speaking about a rate hike in July,” said Bastien Drut, chief thematic macro strategist at CPR Asset Management. “Everything has changed,” he added.Derivatives markets are pricing in a return to zero for the ECB’s deposit rate by October, from the current level of minus 0.5 per cent.ECB president Lagarde will participate in an IMF panel on the global economy later on Thursday alongside Federal Reserve chair Jay Powell. Powell and Lagarde are due to make separate speeches on Thursday and Friday respectively.Central bankers in Europe and the US have embraced a more hawkish stance as inflation rates rise to their highest in decades, and they battle to keep a lid on price growth expectations. A closely watched gauge that tracks market expectations for the eurozone’s inflation rate over a five-year period beginning five years from now climbed to 2.44 per cent on Thursday, the highest in a decade.The rise in the Bund yield, seen as a bellwether for eurozone borrowing costs, came as German exports fell 7.2 per cent in March, according to the national statistics office Destatis, in the first such set of economic data to reflect the impact of sanctions against Russia. In the UK, short-term government bonds similarly came under pressure, with the two-year gilt yield rising to its highest since 2009 at 1.63 per cent.In equity markets, Europe’s regional Stoxx 600 share gauge rose 0.8 per cent. Germany’s Dax index added 1.5 per cent, while London’s FTSE 100 rose 0.2 per cent. France’s CAC 40 added 1.8 per cent following a combative television debate days before the final vote of the country’s presidential election.Hedge funds had helped push equities higher earlier this week, as they sought to unwind negative bets. They were net buyers of North American equities on Tuesday, according to a note sent to clients by Morgan Stanley’s prime brokerage unit. Futures contracts tracking Wall Street’s S&P 500 gauge added 0.9 per cent on Thursday, with Nasdaq 100 contracts rising 1.3 per cent. Additional reporting by Laurence Fletcher More

The writer is prime minister of UkraineIf Russia stops fighting, there will be peace. If Ukraine stops fighting, there will be no Ukraine.This feeling permeates our society. Ninety-five per cent of Ukrainians believe in our victory. The courage of our armed forces and citizens has excited the world. Mariupol, Kharkiv, Sumy, Mykolayiv — these cities have become symbols of our people’s invincibility. The heroism of Ukrainian soldiers has proved to be stronger than Russian weapons.To understand the scale of this heroism, compare the military budgets of the two countries. Ukraine’s military spending over the past five years has been about $20bn. Russia’s was almost $350bn. Despite this, Ukraine won the initial stage of the war.The war demands a rethinking of the “responsibility to protect”. We do not call on the west for humanitarian intervention or boots on the ground. Rather it is a responsibility to help David defeat Goliath and conquer the evil perpetrating a new genocide in the heart of Europe. We ask our allies to provide heavy weapons for the Ukrainian armed forces, levy new sanctions against the Russian economy and secure funding for the Ukrainian budget.According to the Congressional Research Service, the US has provided $4bn since 2014 in military assistance to Ukraine. Most of this has come from the Biden administration after Russia’s invasion. The Ukrainian people are grateful for the White House’s response to the threats Russia poses to the world. Unfortunately, the west’s support is not sufficient to liberate all Ukrainian cities, including Mariupol. We need much more weaponry from our allies. Ukraine is ready to fight without these weapons, but once supplied they could save thousands of lives.Sanctions against Russia are bringing peace closer. Russia’s foreign debt default is only a matter of time. But sanctions need to be reinforced and updated to close possible loopholes. Secondary sanctions must be imposed to demonstrate that the west will not tolerate such aggression.Oil and commodity embargoes, restrictions against the entire Russian banking sector — these are needed right now. Despite all the sanctions, Russia makes tens of billions of dollars on its commodity exports. Like the taxes western companies pay in Russia, these funds finance the bombs and shells that pound Ukrainian cities. There is no grey area any more. You either stay in Russia and finance the killing of Ukrainian children and women, or you leave this market, as more than 600 international companies have already done.The war on our territory is causing untold damage to our economy. From afar, it may seem that things are not that bad. The government is working. The state is fulfilling its social commitments. Transport, communications and the internet are still in operation. But this does not make the war less bloodthirsty. Every day people die, fierce fighting continues and cities are being bombed.The fact that Ukraine remains governed speaks of our state’s stability. It speaks of the strength of the government and President Volodymyr Zelensky, as well as the successful use of new technologies, digitalisation, reformed institutions and our people’s will to fight for their European future.Our state and its economy are losing billions of dollars every day. But they still meet their social liabilities, support internally displaced people, provide medications and food, restore infrastructure and defuse mines on our land. Now there is a need to restore damaged homes and construct shelter and transitional housing. But due to the blockade of our seaports and missile strikes on cities and towns, some businesses and a large share of exports are stopped. The budget deficit is growing. At this most difficult moment in our history, we need financial aid from partner countries.Supporting Ukraine is not just about helping an individual state, but the whole world. Despite the shells and mines, Ukrainian farmers are expected to sow 70 to 80 per cent of last year’s farmed areas with spring crops. We understand that Ukraine supplies food to almost 400mn people worldwide. Some countries rely on Ukrainian wheat for almost half their supplies. Russia’s aggression is causing a global food crisis and may lead to famine in parts of the world. Aid to Ukraine can stop this.Some 5mn Ukrainian women and children have left the country because of the war. Almost all refugees are ready to come back as soon as the hostilities are over. Aiding Ukraine will accelerate their return and help Europe avoid a migration crisis.Ukraine will not surrender or succumb to the aggressor. We will fight for as long as necessary. The world knows that the truth is with us. We ask the world to help us defend this truth. More