Euro Zone Bond Yields Tumble Amid Economic Data Shifts

Euro zone bond yields fell after economic data influenced expectations of European Central Bank monetary easing. Inflation dropped in German states, while France saw unexpected inflation rate hikes. Germany's fiscal spending plans and U.S. economic data also affected market sentiment, causing bond yields to shift across regions.

On Wednesday, Euro zone government bond yields declined as new economic data nudged investors towards expecting more monetary easing from the European Central Bank. Key inflation statistics demonstrated a decrease in four large German states, including North-Rhine Westphalia, where the annual inflation rate dipped in April.

Germany's GDP met projections and its unemployment increased to the highest level since the pandemic. Meanwhile, France reported an unexpected rise in its harmonized inflation rate, but its economy expanded slightly. The German 10-year yield, a eurozone benchmark, decreased by 3 basis points to 2.46%.

Across the Atlantic, U.S. Treasury yields also fell amid falling job openings and consumer confidence, influencing expectations of ECB's policy rates. Germany's 2-year yield slipped by 1.5 basis points reacting to forecasts on ECB policies. Germany plans massive fiscal spending on infrastructure and defense, with political agreements paving the way for a new government formation.

(With inputs from agencies.)