Eurozone bonds remain stable against German inflation data


* Polls suggest German inflation of 2.3% for June

* Bund yields hold close to recent one-month highs

* The EU should issue 5 and 30 year bonds

* Eurozone Periphery Government Bond Yields http://tmsnrt.rs/2ii2Bqr

By Abhinav Ramnarayan

LONDON, June 29 (Reuters) – Eurozone government bond yields held steady near recent highs on Tuesday ahead of the release of consumer price data in Germany, with polls suggesting inflation in the Europe’s largest economy will exceed the European Central Bank’s target for the bloc.

Investors are closely watching the inflation numbers and what they may mean for the further central bank stimulus, and German consumer prices have always been above the ECB’s target of ‘just under 2%. A Reuters poll suggests the figure for June, due at 12:00 GMT, would be no different, at 2.3%.

Various other German states are expected to release their own inflation figures during the day, and the country’s most populous state, North Rhine-Westphalia (NRW), already recorded 2.5% inflation in June. compared to the previous year.

“Our economists expect the reopening (of economies) to continue to push up the prices of services and make the prices of goods more sensitive to rising input prices,” ING analysts said in a note. .

Eurozone government bond yields were briefly higher after the NRW data was released early Tuesday, but they have returned to a stable level, hovering near recent highs.

The yield on German 10-year bonds, for example, remained stable at -0.187%; in view of a recent one-month high of -0.146%, but not close enough to warrant any concern.

French 10-year bond yields, which fell sharply after far-right politician Marine Le Pen performed poorly in regional elections this weekend, also held steady at 0.159%.

The reason for the subdued mood is that policymakers in the euro area have scrambled to show that they will not act immediately on spikes in inflation that they see as transient or driven by oil prices, according to analysts.

“The ECB’s assurances mean that there is little that could upend the rate basket until at least September, when policymakers must once again decide the pace of asset purchases,” the officials said. ING analysts.

Still, German 10-year yields have risen almost 40 basis points this year so far, suggesting that each inflation figure points to a bigger rebound and possible recovery of stimulus measures.

Later Tuesday, the European Union is expected to widely launch and price its second issue under the Next Generation EU (NGEU) program. He plans to sell 5-year and 30-year bonds, with investors expecting him to raise between € 15 billion and € 20 billion. (Report by Abhinav Ramnarayan edited by Mark Potter)


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