German Bund yields spike after euro zone CPI data beats

Investing.com - German bond yields spiked on Tuesday, after data showed that consumer price inflation in the euro zone rose more than expected in May, adding to evidence that the European Central Bank's massive stimulus program was taking effect.

Yields on German 10-Year Bunds surged 9.4 basis points, or 17.89%, to hit 0.626% during European morning hours, after rising to an intraday high of 0.628%.

Meanwhile, the yield on Italian 10-Year bonds rose 11.7 basis points, or 5.96%, to hit 2.063%, while Spain 10-Year yields jumped 9.7 basis points, or 5.02%, to 2.030%.

The European Union’s statistics agency Eurostat said the euro zone consumer price index rose by 0.3% from a year earlier in May, following a flat reading in April. Economists had forecast an increase of 0.2%.

Underlying inflation, which excludes prices for energy, food and alcohol, also picked up. Annual core inflation rose 0.9% from a record low of 0.6% in April.

The data indicated that the trillion-euro quantitative easing program launched by the European Central Bank in January is having an effect on the region’s economy.

Elsewhere, the yield on Greek 10-Year bonds slumped 22.3 basis points, or 1.92%, to 11.397% amid ongoing uncertainty over stalled negotiations on a cash-for-reforms deal for Greece.

Prime Minister Alexis Tsipras said Tuesday that Greece submitted a “comprehensive proposal” to its lenders late Monday and added that a decision on an agreement now rested on European political leaders.

Greece is due to make a €305 million payment to the International Monetary Fund on Friday but warned last month that it will be unable to make the repayment if a deal is not reached by then.

In the U.S., the yield on 10-Year Treasurys advanced 4.4 basis points, or 2.0%, to hit 2.236%.

Meanwhile, the euro was up 0.97% to trade at 1.1035 against the U.S. dollar. The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.7% to hit 96.84.

Elsewhere, European stock markets were mixed in choppy trade. The EURO STOXX 50 tacked on 0.1%, Germany's DAX shed 0.65%, France's CAC 40 lost 0.15% while London’s FTSE 100 slumped 0.5%.

Across the Atlantic, U.S. stock futures pointed to a lower open. The Dow futures pointed to a drop of 0.1%, the S&P 500 futures shed 0.2%, while the Nasdaq 100 futures slumped 0.1%.

Later in the day, the U.S. was to release data on factory orders for April. Market players are also looking ahead to the nonfarm payrolls report due later this week.