# Euro zone bond yields rise after U.S. jobs data
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-12-02
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: European bond yields rise as US job data overshadows Fed
Meta Description: European government bond yields increase after strong U.S. job growth and wage rise complicates Fed's rate hike plans, following larger shifts in U.S.
URL: https://financedigest.com/euro-zone-bond-yields-rise-after-u-s-jobs-datahtml

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By Alun John

LONDON (Reuters) – European government bond yields rose after Friday data showed U.S. employers hired more workers than expected in November and raised wages, complicating the Federal Reserve’s intention to start slowing the pace of its interest [rate hikes](https://www.financedigest.com/dollar-firms-after-u-s-labor-data-suggests-more-rate-hikes.html "Dollar firms after U.S. labor data suggests more rate hikes") this month.

Germany’s 10-year bund yield, the benchmark for the [euro zone](https://www.financedigest.com/euro-zone-consumers-more-optimistic-on-inflation-ecb-survey-shows.html "Euro zone consumers more optimistic on inflation, ECB survey shows"), rose as much as 5 basis points on the day to 1.872%, having earlier traded down as low as 1.76%, its lowest since Sept 19.

The German two-year yield, sensitive to [interest rate](https://www.financedigest.com/ecbs-centeno-says-interest-rate-close-to-peaking-if-no-new-shocks.html "ECB’s Centeno says interest rate close to peaking if no new shocks") expectations, rose as much as 8 bps to 2.12%, compared with 1.958% before the data.

Italy’s 10-year [bond yield](https://www.financedigest.com/stocks-up-bond-yields-fall-as-markets-mull-a-fed-policy-pause.html "Stocks up, bond yields fall as markets mull a Fed policy pause") rose as much as 8 bps 3.758%, having earlier dropped as low as 3.647%, its lowest since late August.

The moves followed larger shifts in U.S. Treasury [yields following the data](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling"), which showed U.S. [nonfarm payrolls](https://www.financedigest.com/dollar-tumbles-as-u-s-nonfarm-payrolls-show-mixed-picture.html "Dollar tumbles as U.S. nonfarm payrolls show mixed picture") increased by 263,000 jobs last month, compared to a Reuters estimate of 200,000.

Government [bond yields](https://www.financedigest.com/global-equities-gain-as-rising-bond-yields-pressure-gold.html "Global equities gain, as rising bond yields pressure gold") have dropped sharply in recent weeks have driven by hopes the U.S. Federal Reserve will move away from its aggressive pace of interest [rate hikes](https://www.financedigest.com/oil-falls-as-earthquake-impact-on-crude-eases-rate-hike-fears-rise.html "Oil falls as earthquake impact on crude eases, rate hike fears rise"), which earlier in the year badly bruised bond prices and sent yields soaring.

This rebound had been underscored this week by a dovish [speech by Fed chair Jerome Powell](https://www.financedigest.com/stocks-dollar-pause-ahead-of-powell-biden-speeches.html "Stocks, dollar pause ahead of Powell, Biden speeches") on Wednesday – as well as U.S. [data on Thursday that raised concerns about slowing economic growth while also indicating a slowdown in inflation](https://www.financedigest.com/european-shares-rise-as-us-inflation-data-signals-end-of-rate-hike-cycle.html "European shares rise as US inflation data signals end of rate-hike cycle").

But Friday’s data undermined this narrative.

[“Market attention is on acceleration in wage growth – a key concern for the Fed – and wondering whether this is a reality check after the reassurance they derived from Powell’s](https://www.financedigest.com/jittery-markets-attempt-risk-on-rally-while-waiting-for-powell.html "Jittery markets attempt risk-on rally while waiting for Powell") words earlier in the week,” Richard McGuire, head of rates strategy at Rabobank, said.

The benchmark U.S. 10 [year yield was last](https://www.financedigest.com/most-uk-smes-spent-600-hours-over-the-last-year-preparing-for-new-gdpr-legislation.html "Most UK SMEs spent 600 hours over the last year preparing for new GDPR legislation") up 5 bps at 3.5719%, having briefly touched as high as 3.638%.

The closely watched [spread between Italian and German 10-year yields](https://www.financedigest.com/german-yields-steady-spreads-tighten-after-recent-repricing.html "German yields steady, spreads tighten after recent repricing") was 190 basis points.

(Reporting by Alun John; Editing by Mark Potter, Toby Chopra and Andrew Heavens)


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