Global Bond Markets React to U.S. Economic Data Twist

Germany's 10-year bond yield hit a three-week low on Tuesday following unexpected flatlining in U.S. retail sales for December, according to data. The yield, typically seen as the euro zone benchmark, decreased to 2.802%, its lowest since mid-January, attributed to the stagnant U.S. retail sales.

U.S. retail sales remained unchanged, contrary to economists' forecasts of a 0.4% increase after the previous month's 0.6% rise. Additionally, U.S. labor costs were slightly lower than expected in Q4, leading traders to adjust their expectations of Federal Reserve interest rate cuts, impacting U.S. 10-year bond yields, which fell 6 basis points to 4.139%.

European bond markets remain influenced by U.S. economic data. Italian 10-year bond yields and Germany's 2-year yields also showed shifts. Focus now turns to upcoming U.S. employment and inflation reports, key influences on future market actions. Political developments in Japan and Britain added complexity to global market reactions.