Euro area yields drop, markets increase bets on ECB rate cuts after data
By Stefano Rebaudo
Jan 31 (Reuters) - Euro zone government bond yields fell on Friday and markets ramped up bets on European Central Bank rate cuts after economic data pointed to a bleak outlook.
Germany's unemployment rate rose at the start of the year, as the weakness of Europe's biggest economy takes its toll in the labour market.
French consumer prices increased slightly less than anticipated in January, and German states released inflation figures also showing cooling.
Germany's 10-year bond yield DE10YT=RR, the euro area’s benchmark, dropped 4 basis points (bps) to 2.48%.
Money markets priced in a depo rate at 1.93% in December 2025 EURESTECBM8X9=ICAP from around 2.05% before data.
Germany's two-year bond yield DE2YT=RR, more sensitive to ECB rate expectations, fell 7 bps to 2.13%.
Borrowing costs inched higher early in the session, after falling the day before as market expectations for the ECB monetary easing path were roughly unchanged after Thursday’s policy meeting.
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