Euro zone bond yields steady, stick near recent highs

  • 9/6/2021
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LONDON, Sept 6 (Reuters) - Euro zone sovereign bond yields barely budged on Monday, with markets holding close to highs hit on Friday after the latest U.S. jobs data. With U.S. markets closed on Monday for a holiday and Thursday’s European Central Bank meeting looming, bond yields across the common currency bloc were expected to hold in a tight range. In early trade, Germany’s benchmark 10-year Bund yield was steady at -0.36%. Its 30-year Bund yield was at around 0.14% and held near a six-week high hit on Friday after U.S. non-farm payroll data showed a big miss in new jobs added but a sharp increase in wages and a fall in the unemployment rate. Most other long-dated euro zone bond yields were little moved, with investors already moving to the sidelines ahead of Thursday’s ECB meeting. Borrowing costs were pushed up last week as hawkish comments from a number of ECB policymakers, combined with data showing consumer inflation in the bloc has surged to 3%, sparked unease about a potential slowdown in ECB bond purchases. “If the only decision we expect the ECB to take is on the pace of the next quarter’s worth of PEPP purchases, a spike in inflation and recent hawkish comments have raised the stakes,” said ING senior rates strategist Antoine Bouvet, referring to the ECB’s emergency stimulus scheme. He added that this now put the focus on the ECB’s latest economic forecasts, due out on Thursday. Data on Monday showed German new orders rose 3.4% in July form a month earlier after a rise of 4.6% in June. A slowdown in euro area bond supply meanwhile could also ease upward pressure on bond yields. Analysts estimate that issuance in the bloc at less that 10 billion euros this week. Reporting by Dhara Ranasinghe Editing by Gareth Jones Our Standards: The Thomson Reuters Trust Principles.

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