Trump's tax talk pushes eurozone bond yields up, Greek yields tumble

Eurozone government bond yields were broadly higher on Friday, as a promise by US President Donald Trump to make a major tax announcement soon and strong Chinese economic data renewed concerns about a pick-up in global inflation. Trump said on Thursday that in coming weeks he would announce something "phenomenal" in terms of tax and developing US aviation infrastructure.
That renewed speculation Trump's economic policies would help boost growth and inflation, pushing US Treasury yields higher. Upbeat Chinese trade numbers on Friday added to a sense that inflationary pressures were stirring.
Trump also changed tack and agreed to honour the longstanding "one China" policy during a phone call with China's leader, a major diplomatic boost for Beijing which brooks no criticism of its claim to neighbouring Taiwan.
This helped ease investor concern about geopolitical risks, boosting stocks and taking the edge off safe-haven bonds.
"We've had Trump's comments on tax reform, the phone call with China and quite decent China trade data, so there is a risk-on mood again in markets," DZ Bank rates strategist Rene Albrecht said.
Signs of progress on Greek debt talks also helped weaken demand for top-rated German Bunds, analysts said.
Germany's benchmark 10-year Bund yield rose 2 basis points (bps) to 0.33 percent, while Greece's two-year bond yield fell more than 150 bps to 8.59 percent.
French yields were also set for a weekly fall of 4 basis points, although they rose 6 bps to 1.04 percent on Friday.
In the past two days, investors have taken back some of their most aggressive bets against French bonds, allowing the market to recover.