Reports
Calendar of Monetary and Economic Highlights
Economic Background
Recent Developments on the Meat Markets and Their Impact on Inflation
in Austria and the Euro Area
Money and Credit in the Year 2000
Balance of Payments in the First Three Quarters of 2000
Studie
Austrian Bond Market Developments
The move to Stage Three of the Economic and Monetary Union (EMU) had a favorable effect on the further integration of European bond markets. In international bond markets, the past few years saw a shift in activity from public to private issuers, an increasing dominance of international institutional investors and a convergence of yields in the run-up to EMU. Our analysis reveals that these international trends only partly fed through to the Austrian bond market. In Austria, public bond issuance continued to rise, consolidating its lead over bank bond issuance. If, however, Austrian issues abroad are taken into consideration as well, we discover that bank bonds and, to a lesser degree, also corporate bonds have been gaining much greater momentum than government issues. After the trend towards interest rate convergence before EMU, the yield differential between Austrian and German government bonds again widened slightly, especially in 2000. We try to explain the greater yield gap by means of the factors credit risk and liquidity. Furthermore, econometric tests reveal that Austrian interest rate development has increasingly been influenced by European factors in recent years.