German government bonds have concluded a five-day winning streak, with the yield curve experiencing a slight bearish flattening. The debt market is under pressure from rising energy prices ahead of the resumption of peace talks between the United States and Iran this week. According to a survey of economists, the French and German inflation data for June, scheduled for release on Tuesday, are anticipated to show a deceleration.
The market-implied expectation for European Central Bank rate hikes by year-end, derived from swap markets, stands at 26 basis points, up from 24 basis points last Friday. The previous Friday's figure represented the lowest level in two months.
In the UK, the government bond yield curve exhibited a twisted, flattening pattern. Short-dated bond prices declined due to rising oil prices, while falling risk premiums lifted long-dated bond prices. Andy Burnham reiterated that, should he succeed Keir Starmer as UK Prime Minister, he would commit to adhering to the existing fiscal rules.
Traders have kept their bets on Bank of England interest rates unchanged, forecasting a total of 23 basis points in rate hikes this year.
Market Snapshot
German 10-year bond yield rose 1 basis point to 2.86%.
German Bund futures fell 12 ticks to 127.35.
Italian 10-year bond yield remained stable at 3.59%.
The Italy-Germany yield spread narrowed by 1 basis point to 73 basis points.
French 10-year bond yield increased by 1 basis point to 3.64%.
UK 10-year gilt yield decreased by 1 basis point to 4.72%.
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