# Euro zone yields fall as US payrolls seen easing rate-hike pressure Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-09-02 Category: INVESTING Category URL: https://financedigest.com/category/investing Meta Title: Euro Zone Bond Yields Fall After Jobs Report Shows Slowing Meta Description: Euro zone government bond yields drop in response to U.S. employment report showing rising unemployment and slow job growth in August. URL: https://financedigest.com/euro-zone-yields-fall-as-us-payrolls-seen-easing-rate-hike-pressurehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-09-02t150754z1lynxmpei810purtroptp4global-forex-1736815299023-compressed.jpg) By Yoruk Bahceli and Dhara Ranasinghe (Reuters) – Euro zone government bond yields fell on Friday, falling in line with U.S. peers, after a [closely watched](https://www.financedigest.com/finland-watching-its-waters-closely-after-gas-pipeline-blasts-pm-says.html "Finland watching its waters closely after gas pipeline blasts, PM says") U.S. employment [report showed unemployment rising](https://www.financedigest.com/russian-threat-to-baltic-security-rising-estonian-intelligence-report.html "Russian threat to Baltic security rising – Estonian intelligence report") and job growth slowing in August. U.S. employers hired more workers than expected in August, but moderate wage growth and a [rise in the unemployment rate to 3.7% could ease](https://www.financedigest.com/bank-shares-rise-after-credit-suisse-rescue-eases-crisis.html "Bank shares rise after Credit Suisse rescue eases crisis") pressure on the Federal Reserve to deliver a third 75 basis point interest rate hike this month. With wage growth coming in lower than expected it (the jobs data) points to a slower pace of [rate hikes](https://www.financedigest.com/uk-economys-unexpected-bounce-spurs-more-boe-rate-hike-talk.html "UK economy’s unexpected bounce spurs more BoE rate hike talk") after September’s expected 75 basis point move,” said ING chief international economist James Knightley. The [jobs data](https://www.financedigest.com/stocks-sag-as-hawkish-fed-cools-china-rally-awaits-us-jobs-data.html "Stocks sag as hawkish Fed cools China rally; awaits US jobs data") was met with relief in U.S. and euro area [bond markets](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"), where yields have shot higher in recent weeks on fears of rising inflation and interest rates. But in late Friday trade, benchmark 10-year [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") were down sharply across the region. Germany’s 10-year [bond yield](https://www.financedigest.com/wall-st-stocks-fall-bond-yields-rise-as-china-drops-quarantine-rule.html "Wall St stocks fall, bond yields rise as China drops quarantine rule"), for instance was 6 basis points (bps) lower at 1.51%, having risen to 1.63% on Thursday, the highest since end-June. Italian 10-year yields were down 12 bps on the day at 3.83%, having pushed above 4% on Thursday for the first [time since](https://www.financedigest.com/soccer-arsenal-reach-womens-champions-league-semis-for-first-time-since-2013.html "Soccer-Arsenal reach Women’s Champions League semis for first time since 2013") June. The bloc’s bond yields have risen again this week as investors sharply raised their [bets on a large 75 bps rate hike from the ECB](https://www.financedigest.com/analysis-investors-stick-to-bets-on-early-end-to-ecb-hikes-as-uncertainty-grows.html "Analysis-Investors stick to bets on early end to ECB hikes as uncertainty grows") at its policy meeting next Thursday. That followed hawkish rhetoric from policymakers and another higher-than-expected rise to a new [record high in August inflation](https://www.financedigest.com/uk-shop-price-inflation-hits-record-8-in-january-brc-2.html "UK shop price inflation hits record 8% in January: BRC"). I think we’re going to be range-bound in outright yields until the [ECB meeting,”](https://www.financedigest.com/sterling-steadies-vs-dollar-ahead-of-boe-ecb-meetings.html "Sterling steadies vs dollar ahead of BoE, ECB meetings") said Peter McCallum, rates strategist at Mizuho in London. In Europe it’s more a story about the market viewing things as more fairly [priced given how much has been factored in for the ECB meeting,”](https://www.financedigest.com/eu-meets-to-try-to-break-gas-price-cap-impasse.html "EU meets to try to break gas price cap impasse") he added. Money markets price in over an 80% chance of a 75 bps [hike at the meeting](https://www.financedigest.com/the-recent-bank-of-england-meeting-the-biggest-rate-hike-recession-warning-and-the-fallout.html "The recent Bank of England meeting, the biggest rate hike, recession warning and the fallout"), levels similar to Thursday, according to Refinitiv data, compared to less than 50% last Friday. The closely-watched [spread to German](https://www.financedigest.com/german-yields-steady-spreads-tighten-after-recent-repricing.html "German yields steady, spreads tighten after recent repricing") peers was at 233 bps, after rising to 243 bps on Thursday, when it neared levels at which the ECB first promised its new tool, now called the Transmission Protection Instrument, to contain large divergences between member states’ borrowing costs it sees as unwarranted. BNP Paribas became the [latest bank](https://www.financedigest.com/how-can-banks-defend-the-latest-generation-of-scam-victims.html "How can banks defend the latest generation of scam victims?") to revise its call for a 75 bps move next week. A senior economist at German insurer Allianz meanwhile said the ECB would likely have to cut rates early next [year in the face of recession](https://www.financedigest.com/uk-to-avoid-recession-this-year-but-outlook-still-weak-bcc-says.html "UK to avoid recession this year but outlook still weak, BCC says"). (Reporting by Yoruk Bahceli and Dhara Ranasinghe ; Editing by Angus MacSwan, Raissa Kasolowsky and Jonathan Oatis) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---