They've rebounded somewhat in the last two weeks, thanks to strong economic data and central bank officials pushing back against that narrative. Tuesday's January U.S. consumer price index (CPI) data will be closely watched by investors for its potential influence on the U.S. Federal Reserve. It is expected to show the headline year-on-year figure falling to 6.2% from 6.5% in December. Italy's 10-year bond yield was last down 2 bps to 4.195%. That pushed the gap between German and Italian 10-year yields down slightly to 183 bps. Many European Central Bank (ECB) officials have argued against the notion that they could soon pause their interest rate hikes. Some have said they are concerned about core inflation, which remained at a record high of 5.2% in January. German policymaker Isabel Schnabel said on Friday that rates must still rise significantly. "We'll keep rates high until we see robust evidence that underlying inflation returns to our target," she said in a Twitter Q&A. Yet Italy's Ignazio Visco said on Saturday that the ECB should avoid pushing interest rates too high given the level of debt in the euro area. Italy's 2-year yield was 1 bp lower at 3.266% on Monday. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Euro zone bond yields ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Harry Robertson; Editing by Emelia Sithole-Matarise)
By Harry Robertson
LONDON, Feb 13 (Reuters) - Euro zone government bond
yields fell slightly in choppy trading on Monday as investors
awaited Tuesday's U.S. inflation report.
Germany's 10-year yield was last down 1 basis
point (bp) at 2.359%, after rising to its highest level in more
than a month at 2.396% earlier in the day. It remained well
below late December's 11-year high of 2.569%.
The German 2-year yield , which is sensitive to
interest rate expectations, rose to a 14-year high of 2.789%
before paring some of that increase to stand less than 1 bp
higher at 2.761%.
"There's not much fundamental news to speak of," said Erik
Nelson, macro strategist at Wells Fargo. "It's hard to see
yields going much lower and the balance of risks is still to the
upside."
Global bond yields, which move inversely to prices, have
fallen sharply since hitting multi-year highs last year, with
falling inflation raising hopes that central banks might soon
stop hiking interest rates.
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