Euro zone yields steady near multi-year highs

Euro zone bonds ​steadied on Tuesday, with ​yields just shy ‌of multi-year ​highs hit the previous day when investors braced for a sustained period ‌of high energy prices that could spill over into broader inflation and cause central bank rate hikes. Germany's 10-year yield, the ⁠benchmark for the euro zone, was down 1 basis point at ​3.14%.

Euro zone bonds ​steadied on Tuesday, with ​yields just shy ‌of multi-year ​highs hit the previous day when investors braced for a sustained period ‌of high energy prices that could spill over into broader inflation and cause central bank rate hikes. Helping the mood on Tuesday ‌was a social media post from U.S. President Donald ‌Trump saying he had paused a planned attack against Iran after Tehran sent a peace proposal to Washington, and that there was ⁠now a "very ​good chance" ⁠of reaching a deal limiting Iran's nuclear program. Germany's 10-year yield, the ⁠benchmark for the euro zone, was down 1 basis point at ​3.14%. It rose as high as 3.19% on ⁠Monday, its highest since 2011. Its rate-sensitive two-year yield dropped nearly 3 bps ⁠to ​2.69% on Tuesday, as investors slightly pared back bets on the scale of European Central Bank tightening they ⁠expect. They still see around an 80% chance of a ⁠25 basis ⁠point rate hike next month, however, and see two further such moves as likely by year ‌end.