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Yields Rise on Eurozone FIG data


Interest rate sensitive two-year euro zone government bond yields hit 1-month highs while Euribor interest rate futures set 1-month lows on Friday after a surprise jump in the ECRI inflation gauge.

Underlying price pressures in the euro zone rose to a 35-month high in July as inflationary influences grew in all four of the bloc's major economies, the Economic Cycle Research Institute index said.

The ECRI said its Eurozone Future Inflation Gauge (EZFIG) for July rose to 96.8 from a downwardly revised 95.2 in June.

"It is a quiet morning and this news was a shocker to the market," said one bond trader in London. "The fact that inflation is at a 35-month high caught the market's attention."

At 0747 GMT, the interest rate sensitive two-year Schatz yield was up 2.8 basis points at 2.52 percent, having hit a 1-month peak at 2.53 percent. It had traded flat ahead of the data at 2.49 percent.

The December Euribor futures contract, a market barometer of euro zone rate expectations, hit a 1-month low at 97.735 and was last down 3.5 basis points on the day.