Rising Yields: Economic Resilience and Market Rebounds

Germany's 10-year bond yield rose due to stronger U.S. data and a revival in Japanese equity markets. The U.S. services sector rebounded in July, easing recession concerns, while Germany's two-year yield also saw an increase, reflecting changing expectations on central bank easing.

Germany's 10-year bond yield has climbed from its seven-month low, buoyed by stronger U.S. data that allayed fears of an imminent recession. Japanese equity markets also saw a significant recovery. The 10-year yield in Germany was last recorded at 2.212%, up from the Monday low of 2.074%.

The surge in bond yields was driven by data showing a rebound in the U.S. services sector for July, marking its first employment growth since January. This data helped temper recession anxieties that had been stoked by a weak U.S. labor market report on Friday, thus reducing expectations of aggressive central bank easing within the year.

Germany's two-year yield, which is more responsive to central bank policy shifts, increased by 4.5 basis points to 2.382%. It had reached a low of 2.151% on Monday. Italy's 10-year yield also edged up by 1 basis point to 3.684%, widening the spread between Italian and German 10-year yields to 146 basis points, following a recent high of 153.9 basis points.

(With inputs from agencies.)