LONDON: Euro zone bond yields were little changed on Tuesday after rising at the start of the week on the back of strong US retail sales data and a fall in demand for safe assets.
Euro zone yields edge higher as safe-haven demand recedes
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Germany’s 10-year bond yield, the benchmark for the euro zone, was up 1 basis point (bp) at 2.44%. Yields move inversely to prices.
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The German 10-year yield climbed 7 bps on Monday after March US retail sales data came in stronger than expected. Investors also moved back out of bonds on Monday, having snapped up safe assets on Friday as tensions between Israel and Iran ratcheted higher.
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Euro zone yields have risen less than those in the US in recent weeks as the American economy has continued to beat expectations, causing investors to significantly cut back their bets on Federal Reserve rate cuts this year.
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Italy’s 10-year bond yield was last up 3 bps at 3.861%. The gap between Germany and Italy’s 10-year borrowing costs was slightly wider at 141 bps, up from a more than two-year low of 115 bps in mid-March.
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Germany’s 10-year bond yield has risen 40 bps this year as investors have moderated their expectations for rate cuts, while the US 10-year yield has climbed 77 bps.
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