Euro Zone Bonds Steady Amid Inflation Jitters

Euro zone government bond yields experienced a slight decline on Tuesday, staying within their recent range. Markets are awaiting inflation data from the euro zone, anticipated to show a slight increase in price pressures. Germany's bench mark 10-year bond yield is down 2 basis points at 2.58%—the tightest trading range for June since 2021, according to Commerzbank.

Timely consumer price data from major euro zone countries have shown mixed results; inflation rose in Spain and France, remained steady in Italy, and dipped slightly in Germany. Economists, as polled by Reuters, expect the region-wide inflation rate to reach 2% in June, aligning with the ECB's target and up from 1.9% in May.

ECB President Christine Lagarde acknowledged the euro zone's inflation volatility as she opened the ECB Forum on Central Banking in Sintra, Portugal. The ECB has signaled a pause on rate cuts with inflation nearing its target. The forum includes a panel with leaders from the Federal Reserve, Bank of Japan, Bank of England, and Bank of Korea. Italy's 10-year bond yield dipped by 2 basis points to 3.474%, keeping the spread between Italian and German 10-year yields steady at 89 basis points.

(With inputs from agencies.)