LONDON, May 10 Reuters Euro zone bond yields rose on Monday as investors returned their focus to a brighter economic outlook and its implications for central bank policy following large swings following Fridays U.S. nonfarm payrolls data.
Rising crude oil prices after a major cyberattack forced the shutdown of critical fuel supply pipelines in the United States added to upward pressure on bond yields by boosting inflation expectations.
Germanys 10year Bund yield rose to its highest level in almost a week, while Italian borrowing costs held near their highest levels since September.
There is a very broad consensus out there for higher Bund yields, and we agree, said ING senior rates strategist Antoine Bouvet.
There is a visible nervousness in peripheral debt at the prospect of ECB slowing purchases down. Were surprised the market hasnt come to terms with it yet, he added.
While the European Central Bank ECB has stepped up the pace of buying within its PEPP emergency stimulus scheme, signs that the recovery is taking hold have led some officials to talk about slowing purchases in the months ahead.
ECB policymaker Martin Kazaks said on Friday the central bank could decide to reduce the pace of its emergency bond purchases in June if borrowing costs remain low.
But the road to recovery from the coronavirus pandemic will be long, ECB Chief Economist Philip Lane told French newspaper Le Monde in an interview published Monday, highlighting divisions within the ECBs…