By Stefano Rebaudo
Euro zone government bond yields rose on Friday after stronger-than-expected Purchasing Managers’ Index readings from the bloc prompted investors to slightly scale back bets on a European Central Bank rate cut next year.
Euro zone business activity unexpectedly grew at a faster pace in October. French business activity declined faster than expected in October, while Germany’s private sector recorded its strongest growth in nearly two-and-a-half years.
The U.S. Bureau of Labor Statistics is set to release its inflation report later on Friday.
Germany’s 10-year Bund yields were up 0.5 basis points (bps) at 2.58% after hitting 2.612%, their highest level since October 14.
Borrowing costs on both sides of the Atlantic rose on Thursday after U.S. sanctions on Russia prompted a jump in oil prices, which stoked inflation concerns.
Benchmark U.S. Treasury 10-year yields 
US10Y were up 2 bps at 4.01% after rising 3.5 bps a day earlier.
Money markets priced in a 54% chance of a 25-basis-point ECB rate cut by July (EURESTECBM7X8=ICAP) from 60% before the data. The key rate is seen at around 1.85% in December 2026 (EURESTECBM10X11=ICAP) from the current 2%.