German bond gains narrowed after U.S. initial jobless claims came in lower than expected, prompting the market to reduce expectations for Federal Reserve rate cuts. The yield spread between French 10-year bonds and German bonds widened by 2 basis points to 85 basis points, reaching its highest level since early December.
Traders are betting on a 26 basis point rate cut by the European Central Bank this month and a total of 112 basis points by year-end. Meanwhile, British bonds erased gains alongside U.S. Treasuries, with market expectations for Bank of England rate cuts remaining stable at 59 basis points this year.
Market data: The yield on Germany's 10-year bonds fell by 1 basis point to 2.35%, with bond futures down 6 points to 133.38. Italy's 10-year bond yield remained steady at 3.52%, while the spread with German bonds widened by 1 basis point to 116 basis points. The yield on French 10-year bonds rose by 2 basis points to 3.21%, and the 10-year UK bond yield was largely unchanged at 4.57%.
