LONDON, July 30 (Reuters) - Euro zone bond yields rose on
Thursday as traders reacted to a jump in U.S. market rates after
Wednesday's Federal Reserve decision.
Longer-dated bond yields, which typically reflect concerns
about inflation and growth, rose the most after the 30-year U.S.
Treasury yield climbed to a 19-year high overnight
following the Fed's decision to hold interest rates.
Analysts said the rise in long bond yields showed traders
are sceptical about the Fed's commitment to reducing price
pressures, as new Chair Kevin Warsh again refused to offer any
clues about future moves.
Germany's 30-year bond yield rose 3 basis points
on Thursday to 3.14%, although the moves in Europe were more
muted than those in the U.S., reflecting expectations that the
European Central Bank will raise rates again this year to tame
inflation.
"The meeting once again reiterates that central banks might
be able to anchor the front-end, while the long-end remains in
the hands of the market," said Erik Liem, rates strategist at
Commerzbank.
A rise in oil prices was also adding to the upward pressure
on bond yields as traders factored in the possibility of
stronger inflation. Brent crude was up 0.4% at $91.10 a
barrel.
Germany's 10-year bond yield - the benchmark for
the euro zone - climbed 1 bp to 3.16%. Yields move inversely to
prices.
Energy prices climbed as the U.S. and Iran continued to
trade attacks and the conflict spread in scope, with a drone
hitting a U.S.-owned gas storage tanker at Egypt's Mediterranean
port of Damietta according to British maritime security firm
Ambrey.
Euro zone bond yields also ticked up slightly following
better than expected growth data for the bloc, which showed the
economy grew 0.4% in the second quarter.
Shorter-dated European bond yields slipped, however, causing
yield curves to steepen. That reflected a fall in 2-year U.S.
Treasury yields as traders reduced their bets on
immediate Fed rate hikes.
The size and importance of the U.S. economy and its markets
mean European yields broadly follow moves in Treasuries.
UK bond yields and the pound fell slightly on Thursday after
the Bank of England held interest rates at 3.75% as expected and
said domestic conditions were likely reducing inflationary
pressures.