European Bond Yields Fall as Soft US Inflation Data Boosts Buying

The European government bond market saw yields fall on July 13th, led by the benchmark 10-year German bund. The yield was trading in the low 3.1% range as of 16:00 UK time, approximately 0.03 percentage points below the same time the previous day.

The decline in yields was attributed to the flat month-over-month US Producer Price Index (PPI) released on the same day, which fell short of market expectations for a rise of around 0.2%. The lack of inflationary pressure in the US strengthened the view that the Federal Reserve will not rush to raise interest rates.

This momentum spilled over into German and UK long-term bonds, with buying prevailing across US and European bond markets. Crude oil futures trimming their gains during the trading session also provided a tailwind for the European bond market.