Euro Zone Bond Yields Dip as Investors Eye Nvidia Earnings

Euro zone bond yields fell slightly, reversing previous gains, as investors await Nvidia's earnings and European inflation data. The German 10-year yield fell 3 bps to 2.247%. Nvidia's results are critical for AI market trends. European inflation data is expected to indicate slower price growth. Central bank rate cuts remain anticipated.

Euro zone bond yields experienced a minor dip on Wednesday, undoing gains from the previous day as investors geared up for Nvidia's earnings after the U.S. market close and awaited European inflation data set for release on Friday. The benchmark German 10-year bond yield decreased by 3 basis points (bps) to 2.247%, reversing a 3 bp rise recorded on Tuesday. Meanwhile, investors continue to anticipate European Central Bank rate cuts by year-end.

"Today the focus would be on the earnings with Nvidia reporting later today," stated Mohit Kumar, chief economist for Europe at Jefferies. Nvidia's performance is seen as pivotal, given its central role in driving the AI stock market rally. Confidence in AI wavered in early August, triggering a stock sell-off that led investors to seek the safety of government bonds.

European inflation data, due Friday, is projected to show that price growth slowed to 2.2% year-on-year in August from 2.6% in July. Commerzbank's head of rates and credit research, Christoph Rieger, noted that increased corporate bond supply might have contributed to the yield rise seen on Tuesday. In contrast, yields on shorter-dated bonds, which are more responsive to central bank rate expectations, have remained more stable.

(With inputs from agencies.)