Eurozone Yields Steady Amid Inflation Uncertainty

Eurozone bond yields remained steady on Tuesday, with Germany's 10-year bond yield slightly up, ahead of critical inflation data. This data precedes the European Central Bank's upcoming meeting, amid speculation of potential interest rate cuts. Italian yields also experienced minor fluctuations.

Eurozone bond yields held a steady course on Tuesday as the financial sector awaited crucial inflation data from the euro area scheduled for later in the day. Germany's 10-year bond, a benchmark for the region, inched up by less than a basis point to 2.459%, continuing its inverse relationship with pricing.

Monday's reports highlighted an unexpectedly rapid rise in German inflation, drawing investor attention to the forthcoming eurozone harmonised index of consumer prices. The results will play a pivotal role in shaping expectations ahead of the European Central Bank's meeting set for January 30.

The markets currently forecast a significant interest rate reduction by the ECB, projecting cuts of around 100 bps this year. Meanwhile, Italy's 10-year yield rose by 2 bps to reach 3.597%, after peaking at 3.629%, marking its highest level since November 18. The yield gap between Italian and German bonds expanded by 1.5 bps to 112.7 bps, signaling increased market adjustments.

(With inputs from agencies.)