Yields on U.S. and European government bonds edged lower on Tuesday, though they remained near multiyear highs. Investors adopted a cautious stance ahead of crucial U.S. consumer-price inflation data scheduled for release, which could influence the Federal Reserve's monetary policy decisions.
The probability of the Federal Reserve increasing interest rates at its upcoming meeting next week saw an uptick among market participants. This heightened expectation contributed to the elevated yield levels observed in recent trading sessions. Bond yields, which move inversely to prices, have been sensitive to economic indicators and central bank signals regarding inflation and future interest rate paths.