the slope of the us treasury and the german bund curves. you can see this on my first slide, measured as the simple difference between ten - year and twoyear yields. you can see the marked flattening of the treasury curve last year which has only recently come to a halt. the us yield curve is currently at its flattest level for more than ten years, with ten - year treasuries yielding just about 60 basis points more than two - year bonds. at the start of 2017, the difference was around 130 basis points. you can also see that the german bund curve is currently about twice as steep as the us treasury curve and has remained relatively stable, with ten - year bonds over most of the time yielding around 100 basis points more than two - year bonds – not very far from the average observed over the past 20 years. my second slide focuses on the us treasury curve. what you can see here is the ten - year yield 1 / 7 bis central bankers'speeches and a model - based breakdown of the yield into its two main components : the average of the current and expected future short - term interest rates over the maturity of the bond and the term premium. all series are shown as cumulative changes since the start of last year. two facts can be drawn from this chart. the first is that the recent marked flattening of the curve reflects what markets call a “ bear flattening ” – that is, short - term rates have been rising faster than long - term rates. this is evident from the fact that the ten - year yield – the blue solid line – today is about the same as it was a year ago. short - term interest rates, meanwhile, have risen by around 90 basis points. at face value, this would suggest that the repricing of interest rate expectations at the short end of the us curve has not been passed through to long - term rates. this interpretation is incorrect, however. indeed, and this is my second point, the broad stability of the ten - year yield masks two sharply diverging developments : a marked fall in the term premium – the yellow area – and an appreciable repricing by markets of the expected future path of short - term interest rates – the dark orange area. you can see this clearly on the slide. put simply, if it weren ’ t for the parallel fall in the term premium, ten - year treasuries would trade some 50 basis points above their

christine lagarde : ecb press conference - introductory statement introductory statement by ms christine lagarde, president of the european central bank, and mr luis de guindos, vice - president of the european central bank, frankfurt am main, 18 july 2024. * * * good afternoon, the vice - president and i welcome you to our press conference. the governing council today decided to keep the three key ecb interest rates unchanged. the incoming information broadly supports our previous assessment of the medium - term inflation outlook. while some measures of underlying inflation ticked up in may owing to one - off factors, most measures were either stable or edged down in june. in line with expectations, the inflationary impact of high wage growth has been buffered by profits. monetary policy is keeping financing conditions restrictive. at the same time, domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above our target well into next year. we are determined to ensure that inflation returns to our two per cent medium - term target in a timely manner. we will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim. we will continue to follow a data - dependent and meetingby - meeting approach to determining the appropriate level and duration of restriction. in particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. we are not pre - committing to a particular rate path. the decisions taken today are set out in a press release available on our website. i will now outline in more detail how we see the economy and inflation developing and will then explain our assessment of financial and monetary conditions. economic activity the incoming information indicates that the euro area economy grew in the second quarter, but likely at a slower pace than in the first quarter. services continue to lead the recovery, while industrial production and goods exports have been weak. investment indicators point to muted growth in 2024, amid heightened uncertainty. looking ahead, we expect the recovery to be supported by consumption, driven by the strengthening of real incomes resulting from lower inflation and higher nominal wages. moreover, exports should pick up alongside a rise in global demand. finally, monetary policy should exert less of a drag on demand over time. the labour market remains resilient. the unemployment rate was unchanged, at 6. 4 per cent in may, remaining at its lowest level since the start