Euro zone bond yields resume climb, inflation data in focus

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LONDON — Euro zone government bond yields rose on Thursday, resuming an upward climb after a brief respite the previous session, with a day packed with inflation data keeping investors on edge.

French inflation hit a near 10-year high of 2.7% in September, official numbers showed, coming in slightly less than forecast.

German inflation numbers are out later in the session, keeping the spotlight on rising price pressures that have unnerved global bond markets in recent weeks.

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“Inflation looks set to remain center stage. Today, the German CPIs should deliver 4%+ prints and already set the tone for tomorrow’s euro area HICP for which the consensus is looking for a 3.3% headline rate,” said Michael Leister, head of interest rate strategy at Commerzbank.

“Accordingly, ECB exit fears should continue to linger and break-evens continue to test the highs,” he added, referring to inflation breakevens, a gauge of market inflation expectations.

In early trade, 10-year bond yields across the single currency bloc were up 1-2 basis points on the day.

Germany’s benchmark 10-year Bund yield was up around 2 basis points at -0.20%, not far off roughly three-month highs hit earlier this week.

And while the moves were relatively modest, euro zone debt markets were set to end September with the sharpest rises in months.

Ten-year Bund yields are up almost 18 bps this month, set for their biggest weekly rise since February. French and Dutch yields were set for their biggest monthly rises since April. (Reporting by Dhara Ranasinghe; Editing by Emelia Sithole-Matarise)