Euro Zone Bond Yields Slip Amidst Federal Reserve Rate Cut Speculations
Euro zone bond yields dropped as U.S. economic data suggested potential Federal Reserve rate cuts. Germany's yields saw a notable dip, reflecting global inflation dynamics. The interplay between U.S. and European financial policies influenced market expectations, with potential rate reductions anticipated for both regions' central banks.
Euro zone bond yields experienced a decline on Thursday, influenced by U.S. Treasuries as signs of soft inflation, retail sales, and factory data point towards potential Federal Reserve rate cuts. Germany's 10-year yield, a benchmark in the euro area, decreased by 5.5 basis points to 2.638%, yet remains near a one-month high of 2.7% reached earlier.
The 2-year yield in Germany, sensitive to monetary policy shifts, dropped by 6 basis points to 1.884%. U.S. producer prices unexpectedly fell in April, impacted by decreasing demand in air travel and hotel accommodation sectors. Additionally, retail sales growth slowed, and industrial output remained unchanged.
Federal Reserve rate cut speculations were supported by the recent U.S. economic data, with about 55 basis points of easing anticipated by year-end. Similarly, the European Central Bank is expected to cut rates by approximately 50 basis points. Market volatility continues amid the backdrop of U.S.-China trade tensions, despite a temporary truce that has buoyed global equities.
(With inputs from agencies.)
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