Euro zone government bond yields rose on Monday after falling sharply the previous week, as investors scrutinised economic data for signs of when interest rates are likely to peak and braced for a wave of debt issuance.
Germany’s 10-year yield, seen as a benchmark for the currency bloc, was up 5 basis points (bps) to 2.253%. Germany’s 2-year yield, which is highly sensitive to interest rate expectations, rose 4 bps to 2.633%.
The yield on Germany’s 10-year bond dropped more than 35 bps last week its biggest weekly fall since 2011, after data showed euro zone inflation cooled more sharply than expected in December and that the U.S. economy is slowing.
“I would really say that the bounce back in yields this morning is some give-back from a very strong start to last week (and) positioning for supply,” said Rohan Khanna, macro rates strategist at UBS.
Euro zone bond yields surged in 2022 as the European Central Bank rapidly hiked interest rates. But yields have fallen sharply since the start of the year, with slowing inflation driving hopes that the ECB might stop raising rates sooner.
Some investors remain nervous about signs that inflationary pressures are stronger than the ECB would like, putting upward pressure on interest rates.
New data on Monday showed that Germany’s industrial production rose more than expected in November.
This report’s information was first seen on ZAWYA; to read more, click this link.
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