50% Off! Beat the market in 2025 with InvestingProCLAIM SALE

Euro zone bond yields rise to one-month high

Published 23/12/2024, 10:20 pm
© Reuters. FILE PHOTO: European Union flags flutter on the day European Central Bank (ECB) President Christine Lagarde speaks to reporters following the Governing Council's monetary policy meeting in Frankfurt, Germany September 12, 2024. REUTERS/Jana Rodenbusch/Fil
DE2YT=RR
-
DE10YT=RR
-
IT10YT=RR
-

By Harry Robertson

LONDON (Reuters) -Euro zone government bond yields rose to their highest level in around a month on Monday as investors continued to try to gauge the outlook for central bank rate cuts in 2025.

The Federal Reserve last week put upward pressure on U.S. government bond yields, which set the tone for other markets around the world, when policymakers said they now expect to cut rates twice in 2025, down from a previous estimate of four cuts.

Germany's 10-year bond yield, the benchmark for the euro zone, rose to 2.327% on Monday, the highest level since Nov. 22, up around 4 basis points (bps). Yields move inversely to prices.

Trading volumes were lower due to traders being off over the holiday season, potentially accentuating price moves.

European Central Bank (ECB) President Christine Lagarde said the euro zone was getting very close to reaching the central bank's medium-term inflation goal, according to an interview published by the Financial Times on Monday.

The ECB cut rates for a fourth time to 3% this month but euro zone bond yields rose after Lagarde struck a slightly tougher tone than expected, saying the fight against inflation was not over.

Lagarde told the FT that headline inflation was at 2.2%, but services inflation remained at 3.9% and "is not budging much".

Irish central bank chief Gabriel Makhlouf warned that elements of services inflation in the euro zone were concerning.

Germany's two-year bond yield, which is sensitive to ECB rate expectations, was last up 3 bps at 2.071%.

Italy's 10-year yield rose 5 bps to 3.50%, after hitting 3.503%, its highest since Nov. 25. The gap between Italian and German yields stood at 117 bps.

© Reuters. FILE PHOTO: European Union flags flutter on the day European Central Bank (ECB) President Christine Lagarde speaks to reporters following the Governing Council's monetary policy meeting in Frankfurt, Germany September 12, 2024. REUTERS/Jana Rodenbusch/File Photo

Investors face an uncertain 2025, with U.S. President-elect Donald Trump's policies a wild card.

Money market pricing on Monday showed investors expect around 115 bps of rate cuts from the ECB next year, little changed from Friday.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.