The inflation rate rose in five major German states during September, according to preliminary data released Wednesday, indicating the possibility of a rise in the inflation rate at the national level this month.
In Bavaria, the inflation rate rose to 3.2 percent in September, from 2.9 percent in August, while in North Rhine-Westphalia and Lower Saxony it increased to 3.3 percent, compared to 2.9 percent in the previous month. The rate also rose in Baden-Württemberg to 2.9 percent from 2.6 percent, and in Hesse to 3.4 percent from 3 percent, according to Reuters.
The rise in inflation came at a time when the war in Iran pushed the prices of energy and raw materials to rise over the past months, while the German government now expects the inflation rate to accelerate to 2.7 percent this year, and to 2.8 percent in 2027.
Economists polled by Reuters expect the coordinated national inflation rate in Germany, the largest economy in the euro zone, to reach 3.2 percent in September, up from 2.9 percent in the previous month. National data is scheduled to be released later Wednesday.
The German data comes before the release of inflation data in the euro zone on Friday; Economists expect the region's inflation rate to rise to 3.6 percent during September, from 3.2 percent in the previous month.
Christine Lagarde, President of the European Central Bank, said on Monday that the wave of inflation witnessed this year has not yet led to serious “second round” effects across the euro zone, adding that a moderate response by the European Central Bank is still appropriate.
The US administration decided to withdraw new quantities of emergency oil reserves, and urged European countries to follow suit, at a time when the administration of US President Donald Trump is trying to limit the rise in fuel prices, less than two months before the midterm elections for the US Congress.
According to a statement issued by the US Department of Energy, on Tuesday evening, the United States will pump up to 40 million barrels of strategic oil reserve, which will represent the latest step by the United States, which has pumped 172 million barrels of strategic reserve, as part of a coordinated international move to confront the rise in oil prices, since the start of the US-Israeli war against Iran at the end of last February.
For his part, US Energy Secretary Chris Wright criticized some European countries, saying that they lagged behind the United States and Japan in contributing to the efforts led by the International Energy Agency to contain the recent energy shock.
Wright said: “Many European member states (of the International Energy Agency) have released small amounts of crude oil and petroleum products compared to their pledges... We urge all member states to fulfill their commitments.”
The prices of oil, gasoline, diesel, and jet fuel have risen sharply since the outbreak of the Iran war on February 28, which has intensified pressure on President Trump to address the problem of high fuel prices, before the midterm congressional elections next November, which will determine the party controlling the House of Representatives.
The price of gasoline is still above $4 per gallon, while the price of diesel has risen to more than $6 per gallon. According to Bloomberg.
At the same time, the Minister of Energy hinted that the US administration is ruling out a new withdrawal from stocks. The strategic reserve is expected to decline to its lowest levels since 1982, once the last round of withdrawal is completed.
Federal law in the United States prohibits withdrawal from stocks in non-emergency situations, if reserves fall below 252.4 million barrels, while a report issued by the Government Accountability Office in 1981 recommended against withdrawal if stocks fall below 250 million barrels.
Japanese government bond yields headed, on Wednesday, to record the fifth strong quarterly rise in a row for the first time since data began to be available in 1992, amid global selling pressure and concerns about Japanese public finances, at a time when stocks jumped led by semiconductor companies and artificial intelligence.
The yield on benchmark 10-year government bonds is heading to rise by about 42 basis points during the three months ending in September, recording the fifth consecutive double-digit quarterly increase, in an indication of the major shift that the Japanese debt market is witnessing with the normalization of monetary policy and rising inflation.
In Wednesday's session, the 10-year bond yield fell slightly, by 0.5 basis points to 3.08 percent, but remained close to its highest levels in three decades. Medium-term yields moved more rapidly as investors' bets on the timing of the Bank of Japan's next move changed. The two-year bond yield fell two basis points to 1.94 percent, after the relatively strong result of the new two-year bond auction helped calm investors' fears.
Expectations of the Bank of Japan raising interest rates in October also declined after bets on a similar increase from the US Federal Reserve declined, following dovish statements from New York Federal Reserve Bank President John Williams.
Masayuki Koguchi, Executive Director of Fund Management at Mitsubishi UFJ Asset Management, said that the rise in expectations for a Japanese interest rate increase in October was linked to the previous increase in bets on raising US interest rates, as markets fear that the widening of the yield difference between the two countries will lead to further weakness of the yen.
Swap contract prices currently indicate a 23 percent probability that the Bank of Japan will raise the interest rate to 1.5 percent during October, down from 36 percent in the previous session, according to Tokyo Tanshi.
In the stock market, the artificial intelligence boom overshadowed the concerns of the bond market, as the Nikkei 225 index rose by 1.94 percent to close at 66,753.72 points, after its gains exceeded 2 percent during the session. The broader Topix index rose 1.67 percent to 4,108.65 points. Artificial intelligence-related stocks tracked the gains of American semiconductor companies, after the Philadelphia Semiconductor Index rose 1.3 percent during Tuesday’s trading. SoftBank Group shares jumped 6.55 percent, Tokyo Electron rose 2.69 percent and Advantest rose 1.03 percent, while Fiber Optic Cable Company Fujikura rose 5.94 percent. Taiyo Yuden, the producer of capacitors used to regulate power in artificial intelligence servers, also rose 2.27 percent after announcing a business alliance with TDK, whose stock rose 2.12 percent.
The gains extended to banking stocks, which usually benefit from rising interest rates, with “Mizuho Financial Group” jumping 4.52 percent, while “Sumitomo Mitsui Financial Group” and “Mitsubishi UFJ Financial Group” shares rose by more than 3 percent each.
The gains reflected a clear expansion in the market, as 72 percent of more than 1,500 shares listed on the main market of the Tokyo Stock Exchange rose, compared to a decline of 23 percent, an indication that investors’ appetite for stocks remains strong despite the historic transformation witnessed by the bond market.
