German 10-year bund yields hit highest in 4 months on hawkish Yellen’s remarks

The German 10-year bund yields touched highest in four months following hawkish comments from the Federal Reserve Chair Janet Yellen. Also, bond prices tracked a retreat in the U.S. Treasuries and dipped on Monday.

The yield on the benchmark 10-year bond, which moves inversely to its price, rose 3-1/2 basis points to 0.091 percent, the yield on long-term 30-year note jumped 4-1/2 basis points to 0.725 percent and the yield on short-term 2-year bond climbed 1 basis point to -0.646 percent by 09:10 GMT.

The Federal Reserve Chair Yellen indicated that the Fed may need to promote a “high-pressure” economy in order to fully recover. Yellen added that increased business sales would almost certainly raise the productive capacity of the economy by encouraging additional capital spending, especially if accompanied by reduced uncertainty about future prospects.

Additionally, Yellen contended that a tight labour market might draw in potential workers who would otherwise sit on the sidelines and encourage job-to-job transitions that could also lead to more efficient - and, hence, more productive - job matches. Yellen furthered that strong demand could potentially yield significant productivity.

On Friday, the U.S. Government bond yields climbed across the board with long-term 30-year bond yields touched four-month high as a rebound in Chinese inflation data eased concerns about sluggish growth from the world's second largest economy amid solid U.S. retail sales and inflation data.

Lastly, investors will remain keen to focus on the upcoming ECB President Draghi speech, German 30-year bund auction and ECB monetary policy decision.

Meanwhile, the German stock index DAX Index traded 0.66 percent lower at 10,511 by 9:20 GMT.