Euro Zone Bond Yields Rise Amid U.S. Inflation Data Concerns

Euro zone government bond yields experienced an increase on Monday after a previous week of volatility, driven by concerns over the U.S. economy. Investors await U.S. inflation data to determine Federal Reserve's interest rate cuts. The German 10-year bond yield, a benchmark for the euro zone, rose 1.6 basis points to 2.238%.

Euro zone government bond yields edged higher on Monday following a turbulent trading week fueled by U.S. economic concerns. Investors are keenly awaiting U.S. inflation data to gauge potential interest rate cuts by the Federal Reserve this year. The German 10-year bond yield, the benchmark for the euro zone, climbed 1.6 basis points to 2.238%.

Earlier, the yield had dipped to a seven-month low of 2.074% amid worries about slowing U.S. jobs growth, unwinding Japanese yen-funded trades, and disappointing earnings from large tech companies. However, U.S. data has shown better-than-expected results, alleviating fears of an economic downturn and prompting traders to reduce bets on interest rate cuts.

"It was a combination of overreaction but also data has shifted a little bit but that shouldn't necessarily warrant moves as big as that," remarked Rufaro Chiriseri, head of fixed income for the British Isles at RBC Wealth Management. Focus now shifts to U.S. consumer prices data expected on Wednesday, which could influence the Federal Reserve's decisions.

(With inputs from agencies.)