Euro zone bond yields dip on US labour market weakness
Updates prices at 1450 GMT
By Harry Robertson
LONDON, July 5 (Reuters) -Euro zone bond yields dipped on Friday after data showed U.S. jobs growth moderated in June and was revised lower for May, bolstering expectations of Federal Reserve interest rate cuts this year.
Data showed U.S. non-farm payrolls rose 206,000 in June, more than the 190,000 economists expected. Yet May's jobs growth numbers were revised down to 218,000, from an earlier estimate of 272,000.
The figures also showed wage growth fell to 3.9% year-on-year in June, from 4.1% in May.
Germany's 10-year bond yield DE10YT=RR, the benchmark for the euro zone bloc, was last down 4 basis points (bps) at 2.542%, having traded about 2 bps lower before the figures. Yields move inversely to prices.
"Investors will interpret today's mixed jobs report as a sign that demand is slowing in the labour market," said Richard Flynn, managing director at Charles Schwab UK.
"The easing demand reflected in today's numbers may bode well for interest rates."
France's 10-year bond yield FR10YT=RR was down 6 bps at 3.22%, set to end the week around 7 bps lower.
The gap between French and German 10-year borrowing costs DE10FR10=RR - a gauge of French risk - fell to its lowest since June 13 at 67.6 bps.
A poll showed Marine Le Pen's far-right Rassemblement National party is likely to fall short of a majority in Sunday's French parliamentary election, soothing investor nerves about the party's potential spending plans.
"The French election outcome is unlikely to stir markets as tail risks have faded," said Benjamin Schroeder, senior rates strategist at ING.
Italy's 10-year yield IT10YT=RR was lower by 7 bps at 3.936%. The gap between Italian and German bond yields DE10IT10=RR narrowed to 139 bps, around the lowest since June 13.
Markets showed little reaction to Britain's general election, where Keir Starmer's Labour party swept to a landslide victory.
UK bond yields GB10YT=RR were down around 4 bps, broadly in line with European markets. The pound and UK mid cap stocks rose after the result.
Germany's two-year bond yield DE2YT=RR, which is more sensitive to European Central Bank rate expectations, was down 4 bp at 2.905%.
Reporting by Harry Robertson; Editing by Andrew Heavens, Anil D'Silva, Barbara Lewis and David Evans
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
