Euro Zone Bond Yields Decline as US Inflation Data Reduces Rate Hike Expectations

European bond yields declined on Thursday as oil prices dropped and the release of US inflation data reduced expectations for a Federal Reserve rate increase in September.

The benchmark Euro zone bond yield fell by 2 basis points to 3.14%, remaining within its recent trading range.

Market participants closely monitored Wednesday's US consumer price inflation report, which revealed moderate underlying price pressures and led markets to lower the probability of a Fed interest rate hike next month.

The data showed that the likelihood of a rate increase at the Fed's September 15-16 policy meeting decreased from around 50% on Tuesday to approximately 35%.