Eurozone bond yields slip ahead of US job openings data

EUROZONE bond yields edged lower on Tuesday (Aug 29) in a risk-on trading day and ahead of US job openings data that may give clues whether or not the Federal Reserve will hike interest rates further, defining some appetite for European bonds.

US job openings figures are due later on Tuesday. With growing expectations those data points could come in soft, US Treasuries extended gains, driving two-year yields and 10-year yields lower.

In the meantime, the risk-on mood lifting European equities eased some appetite for safe-haven bonds. Bond prices move inversely with yields.

After central bankers in Jackson Hole on Friday did not provide much details on the direction of monetary policy, analysts are expecting eurozone bonds to move rangebound until the eurozone CPI and US labour market data release later this week.

“Today, we do not expect strong directional trading in (European government bonds) given the lack of relevant economic data releases in the eurozone prior to tomorrow’s inflation releases in Spain and Germany,” UniCredit analysts wrote in a note.

“A mild decline in US job openings might support Treasuries but appears unlikely to fuel a pronounced market response ahead of Friday’s labour market report,” they added.

Germany’s 10-year government bond yield, the benchmark for the euro area, fell 1.7 basis points to 2.55 per cent, after rising three consecutive days.

Italy’s 10-year bond yield, the benchmark for the euro area’s periphery, also slipped 2.7 basis points to 4.2 per cent.

Germany and Spain will release inflation data on Wednesday. France, Italy and the euro area’s aggregate numbers are due on Thursday.

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In the US, initial jobless claims will be published on Thursday, and monthly employment data on Friday.

A GfK institute survey on Tuesday showed German consumer sentiment in September is expected to fall more than analysts polled by Reuters had forecast, due to declining income expectations and propensity to buy. REUTERS