Euro zone yields fall as investors pause bond selloff, inflation concerns remain

Euro zone borrowing costs edged lower on Wednesday as investors paused a bond selloff after the benchmark Bund yield hit levels close to its 12-year high on fears that central banks might tighten more than expected to tame sticky inflation. Chinese economic data and the absence of meaningful stimulus from Beijing continued to weigh on investor sentiment, triggering some bids into safe-haven government bonds. "Poor risk sentiment finally caught up with rates, but it also looked like investors were covering their short positions," Benjamin Schroeder, senior rate strategist at ING, said in a research note.