Euro Area Bond Yields Rise Amid ECB Policies and US Data Uncertainty
Borrowing costs in the eurozone climbed as German bond yields reached one-month highs. The ECB is expected to maintain current rates, despite speculative risks of rate cuts. Uncertainty persists with the US government shutdown affecting data availability, leading investors to rely on other economic indicators.
Eurozone borrowing costs edged higher on Friday as German bond yields hit one-month highs, reflecting traders' confidence that the European Central Bank (ECB) has concluded its easing cycle. German 10-year and 30-year bond yields rose to their highest levels since October 10, echoing the sentiment of unchanged policy rates.
Investor confidence grew as bond yields—moving inversely to their prices—ticked upwards. Despite the ECB's move to keep rates steady, the possibility of a rate cut remains speculative. ECB board member Isabel Schnabel's speech on Thursday may have exerted upward pressure on long-term yields.
The US government shutdown left investors without fresh data, heightening reliance on alternative indicators like the University of Michigan's consumer sentiment data revealing economic softness. Meanwhile, eurozone bond yields slightly increased, with France and Italy experiencing their highest yields since mid-October.
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