Eurozone yields consolodate as Germany’s 10-year pulls back from 2-week high

Investing.com - Eurozone government bond yields stabilized on Monday, with Germany’s benchmark 10-year yield easing slightly off a recent two-week high as fixed-income markets adjusted positions ahead of a highly anticipated macro data drop and key central bank minutes.

Germany’s 10-year Bund yield, the benchmark for the single-currency bloc, edged just off its two-week peak of 2.95% to hover around 2.91%. Meanwhile, the shorter-dated, policy-sensitive 2-year note remained steady, reflecting a quiet start to a pivotal week for interest rate expectations.

The slight pullback from the two-week high comes after Eurozone government bonds notched their first weekly yield increase since early June, booking a rise of roughly 8 basis points last week.

While falling crude oil prices - with Brent down near $71.66 per barrel on brewing peace talks in the Middle East - and softer-than-expected June Eurozone inflation have capped dramatic yield spikes, a flattening bias has taken over the curve.

Fixed-income traders are reluctant to force major directional moves ahead of Wednesday’s minutes from the Federal Reserve’s June meeting. While the U.S. labor market has shown clear signs of cooling - bolstering hopes of a softer global rate path - the minutes are expected to reflect a hawkish baseline that initially plotted at least one further interest rate increase this year.

Closer to home, the focus centers on a dense lineup of ECB speakers, including President Christine Lagarde and chief economist Philip Lane. Investors will also digest key incoming economic indicators this week, including Eurozone retail sales, producer prices, and German industrial output for May to gauge if the bloc’s manufacturing sector is turning a corner.

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