ECB Cuts Spark Eurozone Yield Rise Amid Inflation Concerns

The European Central Bank cut interest rates by 25 basis points, affecting euro zone government bond yields. Germany's bond yield rose as the ECB aimed to control inflation. Market expectations favor continual rate cuts amid weak economic data and declining inflation, with Italy and France reflecting varying yield impacts.

The European Central Bank has implemented a widely anticipated 25 basis points interest rate cut, applying downward pressure on euro zone government bond yields. With this being the third cut of the year, the ECB emphasizes that inflation is increasingly under control despite a worsening economic outlook.

Following the ECB's announcement, Germany's 10-year bond yield rose three basis points to 2.21%, recovering from a prior 10 basis points drop. The adjustment reflects the ECB's efforts to stabilize inflation and hints at further potential rate reductions as traders adjust to recent economic data.

Inflation in the euro zone was adjusted downward for September, coming in at 1.7% year-on-year, lower than previously estimated figures. The political climate in France also adds pressure, with potential no-confidence votes threatening the government's fiscal strategies, as indicated by far-right leader Jordan Bardella.

(With inputs from agencies.)