Euro zone bond yields fall, market increase bets on rate cuts after ECB, US data

Euro zone government bond yields dropped on Thursday after U.S. economic data and a slight dovish tone from European Central Bank president Christine Lagarde pushed market bets on the total for 2024 ECB rate cuts back up to 140 bps. The ECB kept interest rates unchanged as expected at a record high and reaffirmed its commitment to fighting inflation, giving not even a hint that policymakers were starting to contemplate policy easing. Financial conditions have eased in the last few months, however and analysts had expected the ECB not to risk easing them further by engaging in early rate cut talk.