LONDON, June 4 (Reuters) - Investors are starting to increase their bets on a rate hike in the euro zone in 2019 after strong inflation numbers from the bloc and as political uncertainty eases in Southern Europe.
Money market pricing indicates there is around a 50 percent chance of a rate hike in June 2019. Last week, expectations for a hike in that month had fallen as low as 30 percent.
The markets are also now fully pricing in a 10 basis point September 2019 rate hike. Last week, a hike was only fully priced for October.
Euro zone inflation jumped far more than expected in May on higher energy costs, offering relief to the ECB after market turbulence that has jeopardised its planned exit from a lavish stimulus programme.
Italy’s bond market continued its recovery on Monday as investors took comfort for now from the creation of a government in Rome that ends months of political turmoil. (Reporting by Abhinav Ramnarayan Editing by Tommy Wilkes)