Eurozone government bond yields remained stable near multi-week lows. Traders factored in the results of the US elections and awaited inflation data.
Eurozone government bond yields remained at multi-week lows on Wednesday. Market participants consolidated positions after a sharp two-day rise, assessing preliminary results of the US midterm elections to Congress and awaiting the release of inflation data in the region.
The benchmark yield on Bunds changed little and stood at 3.317%. The day before, the indicator dropped to 3.29% — the lowest value in more than two months. At the short end of the curve, the yield held near the monthly low of 3.028%.
Trading in the sovereign debt market was largely determined by the first results of the vote count in the US elections. Preliminary data indicated notable successes for Democrats in the fight for control of the House of Representatives, while the situation in the Senate remained uncertain.
The market's main attention was focused on the upcoming publication of preliminary data on the eurozone harmonized consumer price index. The consensus assumed persistent inflation due to high gas prices and price pressure in the services sector. Higher figures could increase the likelihood of a 25 basis point ECB rate hike in December.
Traders also monitored the speech of ECB Chief Economist Philip Lane. An additional factor was the unexpected contraction of the French economy in the third quarter and the decline in retail sales in Germany.
French OAT yields were around 4.97%. The next day, the Bank of England's Monetary Policy Committee meeting was to be held, where markets factored in a 25 basis point increase in the base rate to 4%.