Euro zone yields steady as market calms after hot US inflation data
TLT•Euro zone yields steadied after hotter-than-expected US inflation data jolted bond markets a day earlier. Germany’s 10-year yield was up 1 basis point at 3.32%, while France’s was up 1 basis point at 4.80%.
1. Yields steady
Euro zone bond yields steadied on Wednesday after US inflation data jolted Treasuries and spilled over into European markets. Trading was subdued with US bond markets closed for Veterans Day.
2. Rate expectations rise
Germany’s 10-year yield was up 1 basis point at 3.32%, after rising 4 basis points on Tuesday; its two-year yield rose 2 basis points to 3.10%. Traders viewed a December Federal Reserve rate increase as certain and an ECB increase as almost guaranteed. ECB chief economist Philip Lane said it would be “prudent” to raise rates in December if the data did not meaningfully change.
3. French spread steady
France’s 10-year yield rose 1 basis point to 4.80%, while the spread over German yields held at 147 basis points, below October’s peak of 178 basis points. Spain’s 10-year yield also rose 1 basis point. Germany sold €2.5 billion of longer-dated bonds, with demand mixed.
