Euro Zone Bond Yields Rise Amid U.S. Shutdown and Delayed Jobs Data

Euro zone government bond yields increased as investors stayed cautious due to the U.S. government's operational shutdown and expected delay in jobs data. Benchmark yields in Germany and the U.S. rose, with traders anticipating a potential ECB rate cut by July 2027.

Euro zone government bond yields saw a slight increase as investors remained cautious due to the U.S. government shutting down most operations. This shutdown is likely to delay the release of critical jobs data, influencing investor sentiment.

Germany's 10-year Bund yields, which serve as a benchmark for the bloc, climbed 2 basis points to 2.73%. Meanwhile, recent economic data from the region failed to make a significant impact on the sovereign bond markets.

Traders are currently pricing in a 30% chance of a 25 basis points cut in ECB rates by July 2027. In a related development, France's new Prime Minister Sebastien Lecornu announced a target budget deficit of around 4.7% of GDP by 2026 as the yield gap between German Bunds and French bonds reached a near seven-month high.

(With inputs from agencies.)