Euro zone government bond yields held steady on Tuesday, after the United States and China rolled over a trade truce for 90 more days, as expected, while looking ahead to U.S. inflation data that may firm up forecasts for a prompt rate cut.
German 10-year yields (DE10YT=RR) traded around 2.6977%, while two-year yields (DE2YT=RR) were little changed at 1.9706%.
Data later on Tuesday is expected to show U.S. consumer price inflation accelerated moderately in July. The rising cost of imported goods such as furniture and apparel likely pushed up a gauge of underlying inflation by the most in six months.
Traders now expect the Federal Reserve to deliver another rate cut, possibly as early as September, in stark contrast with the European Central Bank, which may not lower borrowing costs for the foreseeable future.
The premium of U.S. Treasury yields over those of 10-year Bunds (DE10US10=RR) has shrunk to its smallest since April…
