Germany’s 10-year Bund yield rose to 2.93%, marking its first weekly increase since early June with a nearly 9 bp rise.
Traders adjusted positions following the initial drop in yields after the US-Iran deal, while rising long-term yields in Japan, driven by concerns over increased spending, also pushed German yields higher.
European bond yields remain well below the multi-year peaks seen in May, as falling crude prices, softer-than-expected inflation, and dovish comments from ECB President Christine Lagarde led markets to scale back bets on a third ECB rate hike this year.
Money markets still view a second hike as more likely than not.
June’s inflation data undershot expectations, with headline inflation easing to 2.8% and core inflation slowing to 2.4%.
At the ECB’s Sintra Forum, Lagarde noted that risks to euro-area inflation and growth had become more balanced.
Meanwhile, a weaker-than-expected US jobs report further dampened expectations for a near-term Federal Reserve rate hike.