0924 ET – The bond rally takes a break as US data fail to entirely support bets on a fast turn to rate cutting by the Fed. October core annual PCE inflation was in line with expectations, slowing slightly to 3.5% from September’s 3.7% pace. Monthly consumer spending growth also met forecasts in a Wall Street Journal survey, slowing to 0.2% from 0.7%. Meanwhile, weekly jobless claims were 218,000, more than the revised 211,000 in the prior week but less than estimated, showing labor markets aren’t easing as fast as forecast. The data boosted yields and the 10-year is now at 4.324%, still on path to end the month at a loss. (paulo.trevisani@wsj.com; @ptrevisani)

Decline in Inflation Expected to Limit Upside in German Bund Yields

0724 GMT – A decent drop in eurozone inflation should limit the upside in German Bund yields, even as front-end valuations look “increasingly ambitious,” says Hauke Siemssen, rates strategist at Commerzbank Research. “Bullish front-end dynamics are driving the rally across bond markets after German and Spanish CPI figures come in noticeably below consensus, but the air should be getting thinner soon with European Central Bank rate cut expectations looking increasingly stretched,” he says in a note. Flash estimate inflation data for the eurozone are due for release at 1000 GMT. The 10-year German Bund yield is trading 0.5 basis points higher at 2.424%, while the two-year Schatz yield is trading at 2.804%, according to Tradeweb. (emese.bartha@wsj.com)

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