Eurozone Bond Yields Drop Amid U.S. Jobs Market Concerns

Eurozone bond yields fell as investors worried about the U.S. jobs market, increasing bets on central bank rate cuts. Data showing a drop in U.S. job openings intensified concerns ahead of a key employment report. European stocks also fell in response to Wall Street's overnight drop.

On Wednesday, Eurozone bond yields fell as investors fretted over the health of the U.S. jobs market, boosting their bets on central bank rate cuts. Yields, which move inversely to prices, declined in morning trading in Europe and extended their fall after data revealed U.S. job openings had plummeted to a 3-1/2 year low in July.

The JOLTS report did little to ease concerns over the U.S. labor market, adding to investor anxiety ahead of August's key employment figures set for release on Friday. Benchmark 10-year German bond yields fell by 5 basis points to 2.22%, while German two-year yields dropped 6 bps to 2.319%, showing their lowest level since early August.

Italian 10-year yields also decreased by 8 bps to 3.585%, narrowing their premium over German bonds by 3 bps to 136 bps. The market slightly increased bets on ECB rate cuts this year, pricing in 62 bps of further cuts. Risk aversion has rattled global markets, driven by concerns ahead of the Friday employment report, which could influence a Federal Reserve interest-rate cut.

(With inputs from agencies.)