Euro zone bond yields dip as global bond selloff pauses
LONDON, Dec 23 (Reuters) - Long-dated German bond yields retreated from a 14-year high on Tuesday as a selloff in global government bonds paused.
Bond yields, which move inversely with prices, were lower globally in thin trade before the Christmas holidays US10YT=RR.
Japanese bond yields, which had led the selloff in the previous two sessions, rising to all-time peaks on many tenors, led the rally on Tuesday.
Germany's 30-year yield DE30YT=RR, which rose to its highest since 2011 at 3.56% on Monday, was down 3 basis points to 3.51% by 0747 GMT.
Its 10-year yield DE10YT=RR, the benchmark for the euro zone, was down at 2.88%.
Other safe-haven assets such as gold and silver hit record highs on Tuesday, driven in part by safe-haven demand from geopolitical tensions as the United States sought to seize more tankers carrying Venezuelan oil. GOL/
Focus was also on expectations over the European Central Bank, where top hawk Isabel Schnabel said on Monday she expects no interest rate hike in the foreseeable future but that prevailing inflationary pressures mean borrowing costs will eventually need to rise.
"That was significant, because it was Ms. Schnabel who’d said earlier this month that she was 'rather comfortable' with expectations about the next move being a hike, which led investors to price in a growing probability that would happen as soon as 2026," Deutsche Bank analysts said in a note to clients.
Traders were on Tuesday betting on an about 40% chance of an ECB rate hike by March 2027 - similar to after last week's ECB meeting, where policymakers kept rates on hold at 2%.
They had priced in over a 50% chance of a hike in early December after Schnabel's initial comments.
In other developments, France's government will push lawmakers to approve emergency legislation to keep the state running into January after they failed to agree on a 2026 budget.
The closely watched spread French debt pays over Germany's was little changed at around 70 bps. DE10FR10=RR
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