Euro Zone Bond Yields Ease Amid Nvidia Earnings Anticipation

Euro zone government bond yields dropped slightly as investors anticipated Nvidia's earnings report and European inflation data. Germany's 10-year bond yield decreased by 2.5 basis points to 2.255%. Nvidia's results are crucial for insights into the AI-driven stock rally. European Central Bank rate cuts are expected by year's end.

On Wednesday, Euro zone government bond yields experienced a minor drop after a climb the previous day. Investors await Nvidia's earnings and European inflation data due Friday. Germany's 10-year bond yield fell 2.5 basis points to 2.255%, counteracting a 3 bp rise seen on Tuesday.

"The focus is on Nvidia's earnings today," commented Mohit Kumar, chief economist for Europe at Jefferies, acknowledging that data releases were scant. Nvidia, pivotal in the AI-driven market surge, will provide insight into the AI boom's sustainability.

Confidence in AI wavered earlier in August, sparking a stock sell-off and driving investors towards safe-haven bonds. Expected to show slowed price growth to 2.2% annually in August, Euro zone inflation data will be released Friday. Traders are anticipating 63 bps of ECB rate cuts this year. Italy's 10-year bond yield decreased by 2 bps, following a 7 bp rise Tuesday.

Christoph Rieger of Commerzbank suggested corporate bond supply increases might have influenced the prior day's yield rise. Shorter-dated yields, sensitive to rate expectations, remain stable. Germany's two-year bond yield dipped by 1.5 bps to 2.381%. The gap between Italian and German yields narrowed to 138 bps, after a significant widening on Tuesday.

(With inputs from agencies.)