Market Analysis

German 10-Year Yields Near Six-Month High Ahead of Expected Inflation Data

Amos Simanungkalit · 31 May 20249.3K Views

The yield on Germany's Bund, the key benchmark for the euro zone, remained stable near six-month highs early on Friday, ahead of upcoming inflation data from both the euro zone and the United States. These figures are anticipated to provide insights into potential adjustments in central banks' interest rate strategies.

German 10-year bond yields, which serve as a barometer for the euro zone, held steady at 2.66%, following a recent peak of 2.69% reached the previous day, marking their highest level since mid-November.

Inflation reports for May from the euro zone, alongside the U.S. Consumer Price Expenditure (PCE) index for April—preferred by the Federal Reserve as an inflation metric—are scheduled for release on Friday.

Earlier in the day, French inflation data was published, showing slightly higher-than-expected figures. This followed similar releases earlier in the week from Germany and Spain.

Italy's 10-year yield remained unchanged at 3.96%, while the spread between Italian bonds and German bunds widened marginally by 0.2 basis points to 129 bps (basis points).

Meanwhile, the spread between U.S. 10-year Treasuries and German bunds also widened by 0.2 bps to 189 bps.

Germany's two-year bond yield, which reacts more sensitively to European Central Bank rate expectations, showed little movement at 3.08%.