02.07.202613:50:23UTC+00Bund Yield Holds Near Two-Week High

Germany’s 10-year Bund yield remained above 2.9%, hovering near a two-week high, as investors weighed disappointing US labor data, softer-than-expected Eurozone inflation, and a scaling back of expectations for aggressive ECB rate hikes this year.

The US economy added only 57,000 jobs last month, far short of forecasts, even as the unemployment rate unexpectedly declined to 4.2% amid a notable drop in labor force participation.

In the Eurozone, June inflation also undershot expectations. Headline inflation eased to 2.8%, while core inflation slowed to 2.4%.

Speaking at the ECB’s Sintra Forum, President Christine Lagarde said that the balance of risks to both inflation and growth in the euro area had become more even, pointing to the recent fall in oil prices. Her remarks marked a change in tone from the ECB’s rate increase three weeks earlier, when policymakers highlighted upside inflation risks linked to the conflict involving Iran.

Since then, oil prices have retreated sharply on growing optimism over a potential US–Iran peace agreement, with Qatar announcing that the next round of indirect talks would be scheduled soon.