Euro zone bond yields tick up as Strait of Hormuz impasse continues
TLT•Market view on ECB pricing and Bund yields
"We see more chances for rate hikes to be priced out and Bund yields to test the lower bound of their range," said Christoph Rieger, head of rates at Commerzbank.
He pointed to subdued U.S. inflation data, which has an impact on expectations for the euro zone economy, and said Friday's U.S. retail sales figures could help cool bond markets if they come in below expectations.
Oil remains contained, limiting inflation pressure
Despite the lack of progress on talks, oil prices have risen relatively modestly and are up 5% for the week after falling the previous two weeks, limiting inflationary pressures.
Oil fell 2% on Thursday after U.S. oil inventories rose and two major energy organisations lowered their demand forecasts. Brent crude rose 0.2% on Friday to $87.20 a barrel LCOc1.
Germany's 2-year bond yield DE2YT=RR, which is sensitive to European Central Bank rate expectations, rose 1 bp to 2.772% and was set to end the week 3 bps higher.
Traders in money markets were last pricing in around 40 bps of further European Central Bank monetary tightening this year, up about 2 bps from the start of the week.
Euro zone yields edge higher as Hormuz tensions persist
LONDON, Aug. 14 (Reuters) - Euro zone bond yields inched higher on Friday as the impasse between the U.S. and Iran over the Strait of Hormuz continued, while oil prices remained subdued as investors focused on signs of weaker demand.
Germany's 10-year bond yield DE10YT=RR rose 2 basis points to 3.163% and was little changed across the week.
