Bund Yields Rise Amid Economic Uncertainty and Inflation Concerns

Bund yields increased after a decline, with U.S. economic data set to influence Federal Reserve policy expectations and euro area rates. German borrowing costs are close to pre-March levels, impacted by political deals. Uncertainty in the U.S. keeps investors cautious, and inflation looms as a potential rate cut barrier.

On Thursday, Bund yields experienced an uptick following three days of decline, as investors eagerly awaited U.S. economic data. This development aligns with Germany's growth figures, which have cast doubt on the impact of government fiscal stimulus on economic expansion.

The release of new U.S. economic data is anticipated to shape expectations regarding the Federal Reserve's policy moves, potentially affecting the euro area's rate outlook. In Germany, 10-year government bond yields rose by 3.4 basis points to 2.68%, rebounding after a fall over the last three sessions.

Market participants have adjusted their predictions for potential rate cuts by the Federal Reserve, influenced by ongoing economic uncertainties. Kristina Hooper, chief market strategist at Man Group, highlighted growing concerns over inflation, which could obstruct further rate cuts.

(With inputs from agencies.)