Euro Zone Bonds React as Inflation Fears Loom

Euro zone government bond yields rose on Thursday following the U.S. Federal Reserve's warning about potential inflation and unemployment threats. Investors are now focusing on the Bank of England's upcoming policy meeting as they navigate economic uncertainties.

While the Fed maintained its interest rates on Wednesday, it acknowledged risks posed by President Donald Trump's tariffs, which are affecting the U.S. economic forecast. Notably, Germany's 10-year yield hit 2.48%, marking its highest since mid-April.

Meanwhile, U.S. Treasury yields also edged upward, with the 10-year yield increasing by 2 basis points to 4.29%. Money markets observe shifts in European Central Bank deposit rates, reflecting concerns over U.S. tariff impacts. German and Italian yields displayed slight increases, indicating investor caution in the market.

(With inputs from agencies.)