Euro zone bond yields slide after surprise US job losses
US non-farm payrolls fell unexpectedly in July, pushing euro zone bond yields lower and boosting hopes for a pause in Fed rate hikes.
Euro zone government bond yields declined on Friday after data revealed that the US economy unexpectedly lost jobs in July, reducing the likelihood of further interest rate increases by the Federal Reserve.
The US non-farm payrolls report showed a drop of 23,000 jobs last month, a sharp contrast to the 80,000 gain economists had forecast. Additionally, June's payroll growth was revised down to 20,000 from an initially reported 57,000.
US employment figures are closely monitored in Europe because of the scale of the American economy and the Fed's influence on other central banks and global financial markets.
Following the release, Germany's two-year bond yield, which is particularly sensitive to European Central Bank rate expectations, fell by 1 basis point to 2.724%, down from 2.754% just before the data. The ten-year German yield also slipped by 0.5 basis points to 3.121%. Bond yields move inversely to prices.
The decline put the ten-year yield on course for its largest weekly fall since late June, with bonds also supported by hopes of a deal to reopen the Strait of Hormuz. However, recent developments suggest tensions between Iran and the US have not yet eased. US President Donald Trump told reporters on Thursday that he believed the conflict with Iran would soon be over, while oil prices remained flat on Friday.