Global bond sell-off eases as investors await inflation figures

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A global bond sell-off eased on Friday at the end of a bumpy quarter for global financial markets, as investors looked ahead to the release of crucial US and eurozone inflation data.

Italian 10-year government bond yields fell 0.11 percentage points to 4.8 per cent, down from their highest level in a decade. German 10-year bond yields slipped 0.09 percentage points to 2.89 per cent, having also hit a 10-year high during the previous trading session. Bond yields move inversely to price.

In the US, the yield on benchmark 10-year Treasuries slipped 0.05 percentage points to 4.54 per cent, having earlier this week hit its highest level since 2007.

Later today, the eurozone’s harmonised index of consumer prices is expected to drop from 5.2 per cent in August to 4.6 per cent in September, according to a Reuters poll of economists. That would mark the slowest annual price growth in the region since October 2021.

US inflation figures are due out on Friday, with “core” prices expected to have increased 3.9 per cent year on year in August, down from 4.2 per cent in July.

Despite the expectations of slowing inflation, markets have been grappling with the prospect of interest rates remaining high for an extended period.

In equity markets, Europe’s region-wide Stoxx 600 added 1 per cent and Germany’s Dax rose 0.7 per cent.

London’s FTSE 100 rose 0.6 per cent after fresh data showed the UK economy recovered from the pandemic faster than previously estimated, while France’s Cac 40 index gained 0.7 per cent after domestic inflation increased at a slower annual pace than expected in September.

Contracts tracking Wall Street’s benchmark S&P 500 and the tech-heavy Nasdaq 100 gained 0.4 per cent and 0.6 per cent, respectively. An index tracking the dollar against a basket of six peers weakened 0.4 per cent.

Chinese tech stocks jumped on Friday morning, after the country’s top internet regulator released a draft rule simplifying cross-border data transfers. 

Hong Kong’s Hang Seng index rose 2.5 per cent, while the Hang Seng Tech index, a gauge tracking the top 30 technology companies, climbed 3.7 per cent. 

Internet companies Tencent and Alibaba rose 2.9 per cent and 3.1 per cent, respectively, while Electric vehicle start-ups Xpeng and Nio gained 3.2 per cent and 2.4 per cent, respectively. Trading was closed in mainland China for a holiday.

With additional reporting by Gloria Li in Hong Kong