Euro Zone Government Bond Yields Rise Before PMI Data
Catherine RichardsEuro area benchmark Bund yields rose on Wednesday to levels seen after last week's ECB policy meeting.
Euro area benchmark Bund yields rose on Wednesday to levels seen after last week's ECB policy meeting, ahead of PMI data later in the session.
The ECB warned that economic growth will take a big hit from U.S. tariffs, bolstering bets for even more policy easing in the months ahead.
U.S. President Donald Trump on Tuesday backed off from threats to fire Federal Reserve Chair Jerome Powell after days of intensifying criticisms of the central bank chief for not cutting interest rates.
U.S. Treasury long-term yields fell in early London trade - with the 10-yeardown 3 basis points (bps) - after slipping on Tuesday as fears that Trump's trade policies could trigger a U.S. economic slowdown provided some demand for bonds.
Germany's 10-year yield (DE10YT=RR), the euro area's benchmark, rose 3 bps to 2.46%.
Money markets priced in a European Central Bank deposit facility rate at 1.57% in December (EURESTECBM5X6=ICAP), down from 1.72% last week before the ECB policy meeting.
Germany's 2-year yield (DE2YT=RR), more sensitive to expectations for ECB policy rates, rose 2.5 bps to 1.69%. It hit 1.622% on Tuesday, its lowest level since October 2022.
The yield spread between French and German 10-year bond yields (DE10FR10=RR) - a market gauge of the risk premium investors demand for holding French assets – stood at 77 bps, around the middle of its recent range since June.
The gap between Italian and German 10-year bond yields (DE10IT10=RR) dropped to 111 bps.
