Euro zone government bond yields fell on Tuesday after rising for four straight sessions on the back of a selloff in US Treasuries driven by strong US data.
Bond yields move inversely to prices.
The benchmark 10-year Treasury yield fell 3 basis points (bps) to 3.99% after topping 4% for the first time in two months on Monday, as markets bet against another jumbo 50 basis point Federal Reserve rate cut after Friday’s strong US jobs report.
Germany’s two-year bond yield, which is more sensitive to European Central Bank rate expectations, was last down 2.5 bps at 2.23%.
It hit 2.294% on Monday, its highest level since Sept. 6.
Markets are pricing in an around 90% chance of a 25 bp rate cut by the ECB this month. Germany’s 10-year bond yield, the benchmark for the euro zone bloc, was down 1.5 bps to 2.24%.
Euro zone government bond yields drop after inflation data
It hit 2.26% on Monday, also its highest level since early September.
Italy’s 10-year government bond yield dropped 0.5 bps to 3.56%, with the gap between Italian and German yields at 129 bps.
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