Euro zone bond yields edge up as U.S. debt ceiling fears ease

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Oct 8 (Businesshala) – Euro zone bond yields rose on Friday as a temporary raising of the US debt limit eased fears of a US Treasury default and investors await employment data that will help determine the Fed’s course .

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The US Senate on Thursday approved legislation to temporarily raise the federal government’s $28.4 trillion debt limit and avoid the risk of a historic default this month, but withheld a decision on the long-term measure until early December.

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German bond yields, which are closely related to US Treasuries, and other euro zone bond yields rose in early trading Friday, tracking US Treasury yields higher.

Germany’s 10-year yield, the benchmark for the euro zone, rose 3 basis points to -0.16% by 0713 GMT, but remained below a three-month high of -0.147% earlier this week, when energy Prices rose and continued to rise. Inflation fears.

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“The Bunds are relatively well-backed, thanks to the (European Central Bank) and low energy futures, outperforming the US Treasury,” said Christoph Rieger, head of rates and credit research at Commerzbank.

The ten-year Treasury yield has risen 7 basis points over the past two sessions, compared to just 2.5 basis points for the Bund.

“The clear message from the ECB’s recent comments is, ‘don’t worry about inflation’ and don’t trust rate hikes in early 2023,” Rieger said.

ECB President Christine Lagarde delivers a speech at 1210 GMT on Friday, followed by Executive Board member Fabio Panetta at 1300 GMT.

But the main focus of the market is US employment data due by 1230 GMT, which a Businesshala poll expects to show an increase in US hiring by 500,000 workers in September, more than double August’s levels.

Investors may be trying to figure out whether the data will allow the US Federal Reserve to announce a tapering of bond purchases at its November meeting.

At the bank’s last policy meeting, Chairman Jerome Powell said that a “reasonably good” employment report would meet the bank’s limit for reducing purchases, so analysts are looking for a closer consensus on meeting that requirement. figure is expected. (Reporting by Yoruk Bahceli; Editing by Kevin Liffey)

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