* Eurozone suburban government bond yields tmsnrt.rs/2ii2Bqr (Adding details, updating prices)
LONDON, April 14 (Reuters) – German government bond yields climbed to a two-week high in late trading Wednesday, unleashing earlier rallies as manufacturing and industrial data in the eurozone and Japan hinted at hurdles ahead as the global economy battles the coronavirus pandemic.
Eurozone industrial output decreased in February after increasing in January, and Japanese machinery orders fell the most in about a year.,
Eurozone bond yields – which tracked US Treasury yields higher on hopes for a strong economic recovery later this year and higher inflation – initially fell.
But that turned around and the yield on German 10-year bond, the benchmark for the single currency bloc, rose to its highest level in more than two weeks in Wednesday night trading at -0.264%, above the level touched on Tuesday when a flurry of bond sales weighed on markets. . .
Bond yields also picked up, with a number of Federal Reserve speakers scheduled for Wednesday after the inflation data beat expectations slightly.
Dallas Federal Reserve Bank President Robert Kaplan reiterated his view that the Fed should start attracting support from the economy sooner than most of his colleagues thought.]
“The overall picture is for a hike in yield,” said ING rate strategist Antoine Bouvet.
“A lot of people believe that a strong recovery is in prices, but this is down to the Fed’s communications – the start of the tapering debate needs to take place this year given the potential strength of the recovery.”
The eurozone economy still stands on “two crutches” of monetary and fiscal stimulus, and this cannot be picked up before a full recovery, said European Central Bank president Christine Lagarde.
Some policymakers have expressed hope the ECB can start reducing bond purchases in the third quarter as the COVID-19 vaccination rate increases.
In the primary market, Ireland hired a syndicate of banks to sell 20-year bonds, which will raise 2-3 billion euros according to market sources.
The government resumed its long-term bond issuance after the issuance subsided with a February bond sell-off, with Austria and Spain selling 50 and 15-year bonds respectively on Tuesday.
The European Union also announced plans for an 800 billion euro recovery fund loan on Wednesday, which will raise about 150 billion euros per year from the end of this year.
Reporting by Abhinav Ramnarayan, additional reporting by Yoruk Bahceli; Edited by Ana Nicolaci da Costa, Kirsten Donovan and John Stonestreet