LONDON: Germany’s benchmark Bund yield steadied on Friday but was still on track for its biggest weekly rise since February after higher-than-expected US consumer price data stoked inflation concerns earlier in the week.

US and euro zone yields rose on Wednesday after higher-than-expected US consumer price data stoked concerns about sustained inflation and a possible monetary tightening. But reassuring comments from the Fed and US retail sales, which unexpectedly stalled in April, saw core yields edge back on Thursday and Friday.

At 1520 GMT, the German 10-year yield was down one basis point at -0.121%, having hit a two-year high of -0.096% on Thursday.

The US 10-year yield was down 2 bps at 1.647%.

European Central Bank Governing Council member Yannis Stournaras said that despite signs that financial markets were predicting inflation, Europe is not facing the kind of inflation concerns seen in the United States and that current monetary policy is appropriate.

Richard McGuire, rates strategist at Rabobank, said that he did not expect there to be sustained higher inflation after the Covid-19 pandemic.

“A notable part of the move higher in yields is not to do with inflation, it’s to do with uncertainty - the compensation that investors need given the difficulty predicting the future,” he said.

European Central Bank meeting account released on Friday “didn’t provide any hard evidence of its next steps,” ING analysts said.

ECB policymakers set the stage for a June 10 showdown over the future of their Covid-19 emergency bond purchases when they met in April but stopped short of discussing their next move, the account of their meeting showed.

As core euro zone yields edged down, Italy’s yields climbed higher, with the 10-year yield reaching 1.091%, its highest since September 2020. It was up 16.5 basis points in the week, setting its biggest weekly rise since April 2020. The spread between Italian and German 10-year yields was at its widest since January. “Peripherals are widening, the fact that they’re outliers perhaps speaks to the fact that the market is quite sensitive and concerned over any prospect of reduced support or insulation for these markets from the ECB,” Rabobank’s McGuire said.

Concerns about growing public debt and uncertainty about the timing of Italy’s recovery plan have also weighed on Italy’s bond prices, which move inversely with yields.