Euro Zone Bond Yields: A Steady Decline Amid Inflation Concerns
Euro zone government bond yields fell on Tuesday, reversing some of Monday's increase, as worry over inflation rises with higher oil and gas prices and tensions between Russia and the West. Despite European Central Bank policymakers' concerns about U.S. trade tariffs, markets expect a rate cut in December.
- Country:
- United Kingdom
Euro zone government bond yields saw a drop on Tuesday, pulling back from a rise the previous day triggered by inflation worries due to surging oil and gas prices. Heightened geopolitical tensions between Russia and the West contributed to a significant increase in crude oil prices.
Despite European Central Bank policymakers expressing greater concern over the potential negative impact of new U.S. trade tariffs on the euro zone's economic growth compared to inflation threats, bond markets have remained focused on inflation risks.
A final reading of October's harmonised inflation for the European Union is unlikely to change the expectation of a 25-basis point rate cut by the ECB next month. Notably, German, Italian, and Greek bonds experienced varying yield drops, and upcoming wage figures and purchasing manager surveys are awaited.
(With inputs from agencies.)