Euro zone yields fell on Monday as investors bid for safe-haven assets on fears that COVID rules and the resulting protests in China might further weigh on the global economic outlook.

Hundreds of demonstrators in Shanghai shouted and jostled with police on Sunday evening as protests flared for a third day following a deadly apartment fire in the country’s far west.

Meanwhile, investors await high-profile European Central Bank (ECB) comments after board member Isabel Schnabel pushed back on Thursday against calls from many of her colleagues for smaller interest rate increases.

Germany’s 10-year government bond yield was down 4 basis points (bps) at 1.93%.

ECB president Christine Lagarde will speak before the Committee on Economic and Monetary Affairs (ECON) of the European Parliament in Brussels at 1400 GMT.

“She will probably reiterate that the ECB will remain data-dependent,” Commerzbank analysts said. Germany’s yield curve steepened after hitting its deepest inversion since 1992 last week. The gap between the 2-year and 10-year government bond yields rose to -22.6 basis points (bps).

It hit -27.1 bps, the widest negative gap since October 1992 late on Thursday, Refinitiv data showed.

Euro zone yields rise as inflation set to hit record high

Analysts said an inversion suggested that investors expect the ECB to pause its rate hikes or even cut them next year as inflation will start declining faster than expected or because the central bank wants to avoid deepening a recession.

ECB officials said the central bank would raise rates even into a recession.

“We are experiencing a clear case of a cost-push inflation shock which undermines real income and reduces demand,” said Erik F Nielsen, UniCredit Group chief economics advisor.

“This type of inflation will decline by itself when the effect of higher commodity prices, and a bit of spillover, reduces demand and washes through the year-on-year index,” he added.

“The latest indicators point towards only a shallow recession during the winter.” Italy’s 10-year yield fell 2 bps to 3.84%.

The spread between Italian and German 10-year yields was widened to 191 bps after briefly hitting its lowest since April 28 at 177 bps early in the session.