Euro Zone Bond Yields Surge as Business Activity Surprises
Euro zone government bond yields rose following robust Purchasing Managers’ Index readings. While France saw a decline in business activity, Germany's private sector experienced significant growth. The anticipation of the U.S. inflation report and imposed sanctions on Russia affected borrowing costs and investor expectations concerning ECB rate cuts.
Euro zone government bond yields experienced an upward trajectory on Friday, triggered by unexpectedly strong Purchasing Managers’ Index (PMI) readings. The new data led investors to scale back on predictions of a rate cut by the European Central Bank (ECB) in the coming year.
While business activity in France shrank more than anticipated in October, Germany's private sector reported its most substantial growth seen in nearly two-and-a-half years. The mixed performances stirred market dynamics within the Eurozone.
As borrowing costs escalated across the Atlantic following the U.S.'s economic maneuvers and fresh sanctions on Russia, inflation concerns also mounted. The market saw a dip in the likelihood of an impending ECB rate cut, projected now as less probable amid prevailing economic conditions.
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