LONDON: Euro zone bond yields dropped on Thursday as traders weighed the impact of the previous day’s soft U.S. inflation data and potential safe haven flows on rising tensions in the Middle East.
Germany’s 10-year bond yield, the benchmark for the euro zone, dropped 4 basis points to 2.50%, its lowest in a week.
Yields around the world dropped on Wednesday after data showed U.S. consumer prices increased less than expected in May helped by cheaper petrol.
Bonds also rallied as investors sought safe havens after U.S. President Donald Trump said U.S. personnel were being moved out of the Middle East because “it could be a dangerous place”.
The comments also sent oil prices higher on Wednesday, however, complicating the picture for bonds.
Other euro zone bonds largely moved in line with the benchmark. Italy’s 10-year yield was down 3 bps at 3.43%.
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