Eurozone Bond Market Calms After Turbulent Week

Eurozone government bond markets experienced a dramatic two-day sell-off but stabilized as the week ended. This was driven by Germany's new fiscal policy plans and U.S. economic data. German Bund yields dropped slightly, reflecting investor anticipation of repercussions from policy shifts and industrial data.

Eurozone government bonds saw a dramatic sell-off earlier in the week, driven by Germany's plan to overhaul its fiscal rules and closely watched U.S. jobs data. Investors took pause on Friday, with German Bund yields falling by 5.5 basis points to a more stable 2.83%.

The volatile movements follow Germany's fiscal announcement, where the 10-year Bund yield rose by 30 basis points mid-week, a record not seen since the 1990s. This upheaval underscored the shifting nature of European fiscal politics and expectations from the European Central Bank.

Moreover, U.S. Treasury yields hit a low for the year, influenced by weak manufacturing data and expected Federal Reserve rate cuts. As the week concluded, Italy's 10-year yields were down, reflecting broader market recalibrations impacted by Germany's bond market direction.

(With inputs from agencies.)