Euro zone government bond yields edged lower on Thursday, with Germany’s 10-year yield down 1.6 basis points to 3.3077% but still set for a weekly rise of about 5 basis points. Markets priced in an 80% chance of a 25-basis-point European Central Bank hike in December.
Germany’s 10-year government bond yield, the euro zone benchmark, was down 1.6 basis points at 3.3077%. It remained on track for a weekly increase of about 5 basis points after four consecutive weekly declines.
A higher-than-expected US inflation reading earlier in the week pushed Treasury yields up and led traders to increase bets on Federal Reserve rate hikes. The moves spilled into Europe before markets steadied; trading was subdued on Wednesday while US bond markets were closed for Veterans Day.
Germany’s two-year yield, which is more sensitive to interest-rate expectations, fell 1.4 basis points to 3.1091% and was headed for a near 13-basis-point weekly rise. Money markets priced in about an 80% chance of a 25-basis-point ECB increase in December and two such increases by mid-2027. Commerzbank rate strategist Erik Liem said Fed comments remain in focus and that any further hawkish remarks could affect ECB expectations.
