Eurozone Bond Yields Hit Low Amid Soft U.S. Data and Political Uncertainty

Eurozone bond markets witnessed a significant dip as key yields touched a one-month low, driven by fragile U.S. economic data and looming political uncertainties in France. German Bunds, set as a benchmark for the euro area, saw yields descend, echoing a broader market trend reflecting concerns over potential Federal Reserve rate cuts.

Specifically, the yield on Germany's 10-year bond decreased by 2 basis points to 2.6405%, a dip attributed to declining investor morale within September, especially in Germany. Simultaneously, the 10-year U.S. Treasury yield fell by 3.5 basis points to 4.05%, as stakeholders brace for U.S. inflation figures expected later this week.

Amidst this financial climate, the yield differential between German Bunds and French OATs narrowed, influenced by anticipations surrounding a confidence vote in France's parliament which could lead to governmental changes. The ECB's upcoming policy meeting holds attention, although immediate action on rate changes isn't anticipated until summer, as markets have priced in an 80% probability of a 25 basis points cut.

(With inputs from agencies.)