Government bond markets remained under pressure on Tuesday, as traders looked ahead to another round of US inflation data and were poised for central banks to tighten monetary policy.
The yield on the 10-year Treasury note, which functions as a benchmark for borrowing costs worldwide, rose 0.04 percentage points to 1.95 per cent as the debt fell in price.
German, Italian and Spanish yields climbed, in anticipation of the European Central Bank following the US Federal Reserve into reducing its purchases of government bonds that have suppressed borrowing costs since coronavirus swept into western nations two years ago.
Equity markets traded cautiously, meanwhile, with the regional Stoxx 600 index opening 0.2 per cent higher. A FTSE index of stocks in Italy, widely seen as one of the eurozone nations most vulnerable to a rise in government borrowing costs, traded flat after losing 1 per cent in the previous session.
Economists expect US inflation data released on Thursday to show that consumer prices rose at an annual pace of 7.3 per cent in January, a four-decade high.
Italy’s 10-year bond yield rose 0.03 percentage points to 1.84 per cent on Tuesday morning, however. Germany’s 10-year Bund yield rose 0.02 percentage points to 0.24 per cent. Until last month, this barometer of wider euro area borrowing costs had sat below zero since May 2019.
Elsewhere in markets, the US dollar index rose 0.3 per cent as rate rise bets climbed ahead of this week’s CPI data.
Futures markets implied the S&P 500 share index and the technology-focused Nasdaq 100 would trade flat when they open in New York.
Brent crude, the oil benchmark, fell 1 per cent to $91.78 a barrel but remained near its highest level since 2014.
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