Euro Zone Bond Steadiness Amidst External Influences

Germany's 10-year government bond yield remained steady near a six-week high on Monday, heavily influenced by external factors such as rising treasury and gilt yields. With the European Central Bank's policy on hold, the focus has shifted to U.S. Federal Reserve decisions and expectations for rate changes.

Germany's 10-year government bond yield remained steady on Monday, maintaining a position close to its peak in almost six weeks, as external factors, including rising treasury and gilt yields, continued to influence euro zone bond markets.

The European Central Bank's policy remains on hold, shifting the focus towards expectations around U.S. Federal Reserve policies. Traders have reduced bets on a U.S. rate cut next month, influenced by policymakers' warnings about persistent inflation, despite signs of a cooling labor market.

SGH Macro's chief U.S. economist, Tim Duy, remarked on the Federal Reserve's increased hawkish stance, which has driven U.S. yields higher, with the 10-year yield rising to 4.13%. With the end of the U.S. government shutdown, markets are keenly awaiting official data, including a delayed jobs report. While U.S. rate cut expectations have diminished, the ECB is anticipated to keep rates steady.

(With inputs from agencies.)