German Inflation Data Influence Euro Zone Bond Yields

Euro zone government bond yields nudged higher on Monday following German inflation data. Investors adjusted their expectations for European Central Bank rate cuts, with Germany's 10-year yield rising to 2.16%. The inflation rate in Germany and other key euro zone economies showed signs of easing. Political dynamics in Austria also impacted bond yield spreads.

Euro zone government bond yields rose slightly on Monday after German inflation data prompted investors to temper expectations for European Central Bank rate cuts.

Germany's benchmark 10-year bond yield increased by 2 basis points to 2.16%, following earlier data indicating inflation decreased across multiple German states. Similarly, France and Spain's consumer prices grew less than anticipated in September, altering market projections on future rate cuts by the ECB.

Two-year bond yields in Germany, sensitive to ECB expectations, climbed to 2.3%. Additionally, Austria's political developments kept the yield gap between Austrian and German 10-year bonds stable, while Italy's 10-year yield rose to 3.49%, widening its gap with Germany's yield to 132 basis points.

(With inputs from agencies.)