Euro zone government bond yields rose on Tuesday, as investors balanced a jump in U.S. Treasury yields the day before against German data confirming that the disinflation process was underway in Europe.
U.S. Treasury yields posted their biggest one-day rise since mid-February on Monday, after economic data raised doubts whether the Federal Reserve could deliver three rate cuts this year. By Tuesday, the 10-year yield was up 3 basis points at 4.361% after jumping 13.5 bps the day before.
On Tuesday, data showed inflation fell in six economically important German states, while national figures showed domestic price pressures eased to their lowest in nearly three years.
Money markets raised their bets on future European Central Bank rate cuts, pricing in 92 bps in 2024 (EURESTECBM6X7=ICAP) from around 90 bps before the data.
“Overall, we now expect euro zone headline inflation to come in around 2.3%, which is below the consensus…
