Euro zone bond yields rise as oil steadies, data reflects economic resilience

Traders are watching energy prices especially closely as they consider the possible path ahead for European Central Bank interest rate policy. The ECB has so far raised rates twice this year in an effort to contain energy-price-driven inflationary pressures.

Bundesbank President Joachim Nagel late on Tuesday said that oil prices were becoming an increasingly important indicator for ECB policymakers in setting interest rates.

He also kept the door open to further interest rate hikes, noting that core inflation is still too high, but added that so far he did not see any significant second-round inflation effects.

Traders were last pricing in around 34 bps of additional tightening from the ECB this year, slightly higher than before Wednesday's PMI data was released, but down from around 40 bps on Friday.