Euro zone to digest 150 bln euros of bond sales in Jan
Issuance adds to caution after stellar rally
ECB39;s winddown of asset purchases also in focus

LONDON, Jan 5 Reuters A 150 billion euro 165 billion deluge of government bond sales in January is fueling unease in euro area bond markets, a foretaste of a potentially record amount of public debt that markets will have to absorb this year.

Bond yields, which move inversely to prices, have started 2024 higher after plunging in November and December. Germany39;s 10year yield, the euro zone benchmark, has risen to just over 2 from a oneyear low of 1.896 last week .

A trimming of investor bets on how much and how early central banks will cut interest rates this year has driven the bond selloff. Now adding to it, are concerns that markets will struggle to digest another year of hefty government debt sales.

ING estimates that the euro area will issue around 150 billion euros of debt this month alone as governments seek to take advantage of the recent yield fall and investors look for newyear opportunities. There is 72 billion euros of net supply when redemptions are factored in.

Inflation has driven euro zone states to increase welfare payments and public sector wages, while higher borrowing costs are adding to their interest bills, keeping debt issuance high.

A similar amount of debt was issued in January last year, but it39;s now coming after a powerful rally that looks like it39;s nearing an end, said Societe…