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Euro zone bond yields inch higher after inflation-driven drop

The spread between French and German borrowing costs was steady at 65 bps
The spread between French and German borrowing costs was steady at 65 bps

Euro zone bond yields edged higher after a sharp drop the previous day on the back of weaker-than-expected US inflation data.

German 10-year bond yield, the benchmark for the euro zone bloc, rose 2 basis points (bps) to 2.493%, but was on track to end the week around 4 bps lower after dropping 7 bps on Thursday. Yields move inversely to prices.

France's 10-year bond yield, which has been in focus after Sunday's election resulted in a hung parliament, rose 2 bps to 3.149% but was on track to finish the week 6 bps lower.

The spread between French and German borrowing costs was steady at 65 bps.

Italy's 10-year yield was also up 2 bps at 3.814%, and the gap between Italian and German bond yields stood at 132 bps.

Germany's two-year bond yield, which is more sensitive to European Central Bank rate expectations, was 2 bps higher at 2.819%.