* Euro zone periphery govt bond yields tmsnrt.rs\/2ii2Bqr<\/p>\n
AMSTERDAM, March 31 (Reuters) – Euro zone bond yields calmed on Wednesday after a sell-off a day earlier as investors awaited inflation data for the region.<\/p>\n
German and Italian yields rose on Tuesday to their highest in nearly two weeks, driven by a sell-off in U.S. Treasuries as U.S. vaccinations picked up and expectations grew that trillions of dollars of infrastructure spending could further lift economic growth and debt issuance.<\/p>\n
On Wednesday, Germany\u2019s 10-year yield, the benchmark for the euro zone, was unchanged at -0.28% by 0722 GMT. Other government bond yields were also flat.<\/p>\n
Focus is on the first-estimate March euro zone inflation reading, which a Reuters poll expects jumped to 1.3% year-on-year in March, up from 0.9% in February.<\/p>\n
The core inflation reading, which excludes food and energy costs, is expected to remain unchanged from February at 1.2%, according to the poll.<\/p>\n
Following national readings on Tuesday, which showed German inflation exceeding the European Central Bank\u2019s target of close to but below 2%, bloc-wide data should not come as a surprise to the market.<\/p>\n
\u201cThe ECB has already made clear it will look through the spike in inflation, a result of supply-side shocks and one-off factors. It has underscored that point by stepping up its PEPP purchases for three months at the most recent policy setting meeting,\u201d ING analysts told clients.<\/p>\n
On the last day of March trading, German 10-year yields were set to end the month 2 basis points lower, outperforming U.S. Treasuries, which have risen 28 bps this month. Bond yields move inversely with prices.<\/p>\n
Germany\u2019s 10-year yield is still set for its biggest quarterly rise since the fourth quarter of 2019, up 30 bps since the start of the year after a sell-off in February. That was driven by rising Treasury yields and expectations the U.S. stimulus package would bring back inflation and growth.<\/p>\n
Focus is on President Joe Biden, who will outline the first part of some $3 trillion to $4 trillion of infrastructure spending proposals expected over the next 10 years.<\/p>\n
Private employment data out due out of the United States may also pose an upside risk, Commerzbank analysts said.<\/p>\n
\u201cEUR rates can shrug off today\u2019s inflation print, but not another leg higher in USD rates,\u201d ING said.<\/p>\n