FX.co ★ Bund Yields Rise Slightly Ahead of US Inflation Data

Germany's 10-year Bund yield increased slightly to approximately 2.83%, as investors anticipate significant US inflation data release later today. This occurs amid this week's substantial sovereign bond issuance. The expected data is likely to indicate stronger core inflation for December, which could potentially delay the Federal Reserve's rate cuts. Meanwhile, in Europe, ECB Governing Council member François Villeroy de Galhau stated on Tuesday that the prospect of an ECB rate hike this year is unrealistic. In December, the ECB held rates steady and upgraded certain growth and inflation forecasts, solidifying the expectation that the policy will remain unchanged for the foreseeable future. This outlook is bolstered by Eurostat figures showing headline inflation falling to 2.0% in December, reaching the ECB's target. Additionally, investors noted the updated hedging strategies from the Dutch pension fund PFZW, which might alleviate short-term concerns regarding added pressure on long-dated government bonds due to the Dutch pension system transitioning to a new framework.