* Eurozone Periphery Government Bond Yields tmsnrt.rs/2ii2Bqr
LONDON, May 10 (Reuters) – Eurozone bond yields rose on Monday as investors focused on a brighter economic outlook and its implications for central bank policy following sharp swings after the data Friday on non-farm payrolls in the United States.
Rising crude oil prices after a major cyberattack forced the shutdown of critical fuel supply pipelines in the United States, added to the upward pressure on bond yields by boosting inflation expectations.
The 10-year German Bund yield hit its highest level in almost a week, while Italian borrowing costs remained near their highest level since September.
“There is a very broad consensus for higher Bund yields, and we agree,” said Antoine Bouvet, senior rate strategist at ING.
“There is visible nervousness in peripheral debt at the prospect of a slowdown in purchases by the ECB. We are surprised that the market has not yet accepted it, ”he added.
As the European Central Bank (ECB) ramped up the pace of purchases as part of its emergency PEPP stimulus package, signs that the recovery is taking hold have led some officials to talk of a slowdown in purchases in the months to come. to come up.
ECB politician Martin Kazaks said on Friday that the central bank may 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 on Monday, highlighting divisions within the ECB’s Governing Council.
The latest ECB bond buying data will be released later today.
At the start of trading, most 10-year bond yields in the currency bloc were 1 to 2 basis points higher on that day.
The German benchmark 10-year Bund yield rose 2.2bp to -0.19%, its highest level in almost a week.
Italy’s 10-year bond yield rose 1.3bp to around 0.94% – near its highest level since September last year.
Data on Friday showing the U.S. economy created just 266,000 jobs in April, a fraction of nearly a million expected, triggered large but short-lived swings in U.S. government bonds and the zone euro.
Analysts said markets now appear to be looking beyond those numbers and Wednesday’s US inflation data for the next key indicator of the US economic outlook.
Report by Dhara Ranasinghe