Euro zone yields rise as investors watch Hormuz, await US data

German 2-year bond yields DE2YT=RR, which are more sensitive to interest rate expectations, rose 5.2 basis points to 2.78%. They reached 2.8938% on July 23, their highest in more than two years.

Germany's 10-year bond yield DE10YT=RR was up 4.6 bps at 3.18%. It hit 3.2118% in July, its highest since May 2011.

Borrowing costs had posted the biggest weekly fall since June on Friday as hopes of an Iran peace deal and weak U.S. data tempered market expectations for central banks’ monetary tightening.

Analysts at Citi highlighted that Friday’s bullish U.S. payrolls data wasn’t enough to push Bund yields out of the 3.1-3.2% range that has held for a month.

"One reason might be that Bunds are primarily now being driven by the natural gas price given its importance for inflationary pressure into the winter and therefore ECB hikes," they said.