Investors are closely watching the peace talks in Ukraine as an agreement could ease inflationary pressures and support growth, potentially shaping the European Central Bank’s policy path.
However, markets remain cautious as they expect a comprehensive and credible agreement to be reached soon. German 10-year yields rose 6 basis points on Monday, following moves in US government bonds, after moving higher earlier in the session before US markets opened. Record high yields on Japan’s 30-year bonds supported demand at a government bond auction on Thursday, as the government plans massive debt-fueled stimulus measures.
US borrowing costs remain the driving force behind yields as the ECB holds rates steady well into 2027. Ten-year U.S. Treasury yields rose 2.5 basis points to 4.08% after falling 3 basis points on Wednesday as data showed private sector labor costs fell surprisingly in November.
The German two-year yield, more sensitive to expectations regarding the ECB’s policy rate outlook, rose by one basis point to 2.06%. They reached 2.08% on Monday, the highest level since late March.
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