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Eye on key U.S. data, tech earnings

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Euro zone inflation reads awaited

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U.S. Treasury yields drop

(Updates latest price moves, adds live quotes from strategists,

adds latest comments from Bessent on trade policy)

By Lucy Raitano

LONDON, April 29 (Reuters) - Euro zone government bond

yields slipped on Tuesday but remained largely rangebound as

traders caught their breath ahead of this week's raft of

economic data and big tech results which should give a clearer

view of the state of the U.S. economy.

U.S. GDP, inflation and employment data are all due this

week, with key releases starting from Wednesday.

Germany's 10-year bond yield, the euro zone benchmark, was

last down 2 bps to 2.49% and its rate-sensitive two-year yield

was steady at 1.74%.

Italy's 10-year yield was flat at 3.62%, leaving the spread

between German and Italian 10-year yields at 108.7 basis points.

Yields took a slight hit in early afternoon trading,

tracking U.S. Treasury yields which dropped as U.S. Treasury

Secretary Scott Bessent said during a press briefing that China

could lose 10 million jobs due to tariffs.

U.S. 10-year Treasury yields fell 3 bps, slightly

underperforming euro zone yields.

"The U.S. expansionary phase ... was already clearly

running out of steam, even before we saw the destruction and

turmoil that resulted from the tariffs," said Richard McGuire,

head of rates strategy at Rabobank.

He pointed to U.S. GDP figures due Wednesday as well as

earnings due out from the likes of tech giants Apple ( AAPL ),

Meta, Microsoft ( MSFT ) and Amazon ( AMZN ).

"The earnings releases from these companies over the

next couple of days will be an important staging post as the

market tries to understand the relative strength or weakness of

the outlook," McGuire said, though he added that both the

results and U.S. data would be somewhat backward looking.

"The key point is that any weakness that they indicate

is clearly before the additional headwinds," he said.

As well as keeping an eye on tariff developments and key

U.S. data, market players are awaiting euro zone countries'

inflation data. Spain was first to report on Tuesday with a

slightly sticky print that markets nevertheless brushed off.

Spain's 12-month, EU-harmonised inflation was unchanged at

2.2% in April - but higher than the 2.0% rate expected by

analysts polled by Reuters. Meanwhile, economic growth slowed to

0.6% in the first quarter.

"Spanish CPI was above forecast but no one seems to care

too much," said Kenneth Broux, head of corporate research FX and

rates at Societe Generale. "CPI for France and Germany (on

Wednesday) will be a better test."

Investors are watching the inflation data in case

higher-than-expected figures make it harder for the European

Central Bank to cut interest rates to support economic growth,

particularly given the expected hit from tariffs.

Broux said growth risks now "had the upper hand" for the

ECB, and the main question was whether they cut their key

interest rate to 1.75% from its current 2.25% in one 50 basis

point jump, or in two 25 bps moves.

Market pricing currently reflects expectations of a 25

bps cut in June, but they show an outside chance of a 50 bps

move.,

ECB board member Piero Cipollone said on Tuesday that a

global trade war could lower both economic growth and inflation

in the euro zone and it could have an "unambiguously

recessionary effect" on the countries involved.