Euro Zone Bond Yields Do An About-Turn After U.S. Inflation Data

• Eurozone government bond yields rose on Wednesday after data showing a bigger-than-expected rise in inflation last month in the United States. 
• Data showing U.S. annual inflation rose 8.3% in April, down from 8.5% a month earlier, but above analyst expectations for an 8.1% rise, triggered a wave of selling in bonds. 
• Germany's 10-year Bond yield was last up 1.5 basis points on the day at 1.018%, having fallen just below 1%, its lowest level in almost a week earlier. 
• "I think it is natural to see yields rising after a strong core CPI like we had," said Peter McCallum, rates strategist at Mizuho. But capping the yields rally is a 75 basis point hike from the Federal Reserve, which seems out of sight at this point, McCallum added. "I think there's enough that the market can look at in that report to not necessarily price too much more hawkishness from the Fed," he said. 
• Earlier in the session, yields across the currency bloc fell to their lowest levels in almost a week, with investors taking comfort from signs that any tightening in European Central Bank monetary policy will be gradual. 
• The ECB is likely to end its bond-buying stimulus programme early in the third quarter, followed by a rate hike that could come just "a few weeks" later, ECB President Christine Lagarde said.

(Source: Reuters)