Euro Zone Bond Yields Surge Amid Strong Economic Data

Euro zone bond yields experienced their biggest weekly rise in a month as strong economic data prompted traders to scale back expectations for central bank rate cuts. Germany's benchmark 10-year bond yield dropped slightly to 2.6%, while Italy's 10-year yield remained steady at 3.90%.

Euro zone bond yields were on track for their biggest weekly rise in a month on Friday, although they were little changed on the day, after strong economic data caused traders to further scale back their bets on central bank interest rate cuts. Germany's 10-year bond yield, the benchmark for the euro zone bloc, was down 1 basis point (bp) at 2.6% on Friday, but heading for an 8 bp rise across the week.

Italy's 10-year yield was little changed​ at 3.90%, and the gap between Italian and German bond yields widened 0.6 basis points to 129 bps. The spread between U.S. 10-year Treasuries and German bond yields narrowed 1.4 basis points to 187 bps.

Germany's two-year bond yield, which is more sensitive to European Central Bank rate expectations, was little changed at 3.08%.