German benchmark bond yield slips to more than three-week low after US data
LONDON, Feb 10 (Reuters) - Germany's benchmark bond yield dipped to more than a three-week low on Tuesday after data showed U.S. retail sales unexpectedly flatlined in December.
The German 10-year yield DE10YT=RR - traditionally the benchmark for the euro zone - fell to 2.802%, the lowest level since mid-January, and was last down 3 basis points (bps).
U.S. retail sales were unchanged in December, official data showed, undershooting economists' expectations for a 0.4% increase after a 0.6% rise in the previous month.
A separate report from the U.S. government showed a measure of labour costs came in slightly lower than expected in the fourth quarter.
U.S. 10-year bond yields US10YT=RR fell 6 bps to 4.139% as traders nudged up their bets on Federal Reserve interest rate cuts.
The size of the U.S. economy and bond market tend to drive European sovereign debt. Yields fall as prices rise, and vice versa.
Italy's 10-year bond yield IT10YT=RR was last down 4 bps at 3.42%, around a three-week low.
Germany's 2-year bond yield DE2YT=RR was last 1 bp lower at 2.051%.
"Europe this week is really a spectator to more global events," said Kenneth Broux, head of corporate research, FX and rates at Societe Generale.
In a quiet week for euro zone data, attention will also focus on more U.S. figures, particularly the employment report for January on Wednesday and inflation data on Friday. That data could shift market expectations for the Fed's rate policy.
Euro zone bond traders also have been keeping an eye on political developments in Japan and Britain.
Japanese bonds have remained broadly steady since Prime Minister Sanae Takaichi won a landslide election, giving her a mandate for further stimulus measures.
British assets came under pressure on Monday as uncertainty over Prime Minister Keir Starmer's future grew, but markets calmed after he received support from other senior party figures. The country's 10-year bond yield GB10YT=RR was last 3 bps lower.
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