Euro Zone Bonds Mixed Amid Rate Cut Speculation

Euro zone bond yields were mixed on Monday following last week's declines. Traders adjusted bets on ECB and Fed rate cuts as key U.S. inflation data and ECB rate decisions are anticipated this week. Germany's 10-year bond yield rose marginally, while rates and equity markets reflected investor sentiment shifts.

Euro zone bond yields showed mixed results on Monday after a four-session drop, with traders slightly scaling back bets on rate cuts from the European Central Bank and the Federal Reserve. Germany's 10-year bond yield, a key benchmark, rose 0.5 basis points to 2.18%, following an earlier peak at 2.239%.

Last week, the benchmark yield decreased by 12 basis points as data indicated a cooling U.S. labor market. Investors this week are focusing on upcoming U.S. inflation data and the ECB's interest rate decision. Friday's U.S. employment report, which revealed weaker-than-expected non-farm payroll growth and a slight fall in the unemployment rate to 4.2%, continues to influence market movements.

Stock markets rose on Monday after declines last week, suggesting a shift of funds from bonds to equities. Money market traders now expect the Fed to reduce rates by at least 25 basis points this month, although the likelihood of a more substantial 50-basis-point cut has decreased to 25% from 50% last Friday.

(With inputs from agencies.)