May 5 Reuters Euro zone bond yields edged up on Wednesday as equity markets recovered from a sudden slump a day earlier that had sent yields on the safehaven assets falling sharply.

Stock markets fell 0.5 on Tuesday in a matter of minutes and further afterwards, leaving traders perplexed as to what was behind the move.

That was followed by U.S. Treasury secretary Janet Yellens comments that rate hikes may be needed to stop the economy overheating as a vast stimulus programme boosts growth, which predominantly hit equity markets, but also cut the fall in bond yields.

Expectations of higher growth and inflation, predominantly driven by the U.S. stimulus programme, have pushed bond yields higher on both sides of the Atlantic this year.

Yellen said later that she does not anticipate inflation would be a problem for the U.S. economy and any price increases would be transitory.

With European equity markets opening higher on Wednesday, bond yields, which move inversely with prices, edged up in early trade.

Germanys 10year yield, the benchmark for the region, was up 1 basis point to 0.22 at 0824 GMT, below its highest since March 2020 hit at 0.162 on Monday.

I expect the yield curves in the eurozone and the U.S. to steepen, driven by better equity markets and ahead of the ADP and NFP print which should be supportive for the inflationary thesis, said Sebastien Galy, senior macro strategist at Nordea Asset Management, referring to U.S. employment data due later this week….