Euro zone bond yields edge down ahead of month-end economic data deluge

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Eye on key U.S. data, tech earnings

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Euro zone inflation reads awaited

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U.S. Treasury yields drop

(Updates latest price moves, adds live quotes from strategists, adds latest comments from Bessent on trade policy)

By Lucy Raitano

LONDON, April 29 (Reuters) - Euro zone government bond yields slipped on Tuesday but remained largely rangebound as traders caught their breath ahead of this week's raft of economic data and big tech results which should give a clearer view of the state of the U.S. economy.

U.S. GDP, inflation and employment data are all due this week, with key releases starting from Wednesday.

Germany's 10-year bond yield, the euro zone benchmark, was last down 2 bps to 2.49% and its rate-sensitive two-year yield was steady at 1.74%.

Italy's 10-year yield was flat at 3.62%, leaving the spread between German and Italian 10-year yields at 108.7 basis points.

Yields took a slight hit in early afternoon trading, tracking U.S. Treasury yields which dropped as U.S. Treasury Secretary Scott Bessent said during a press briefing that China could lose 10 million jobs due to tariffs.

U.S. 10-year Treasury yields fell 3 bps, slightly underperforming euro zone yields.

"The U.S. expansionary phase ... was already clearly running out of steam, even before we saw the destruction and turmoil that resulted from the tariffs," said Richard McGuire, head of rates strategy at Rabobank.

He pointed to U.S. GDP figures due Wednesday as well as earnings due out from the likes of tech giants Apple (AAPL), Meta, Microsoft (MSFT) and Amazon (AMZN).

"The earnings releases from these companies over the next couple of days will be an important staging post as the market tries to understand the relative strength or weakness of the outlook," McGuire said, though he added that both the results and U.S. data would be somewhat backward looking.

"The key point is that any weakness that they indicate is clearly before the additional headwinds," he said.

As well as keeping an eye on tariff developments and key U.S. data, market players are awaiting euro zone countries' inflation data. Spain was first to report on Tuesday with a slightly sticky print that markets nevertheless brushed off.

Spain's 12-month, EU-harmonised inflation was unchanged at 2.2% in April - but higher than the 2.0% rate expected by analysts polled by Reuters. Meanwhile, economic growth slowed to 0.6% in the first quarter.

"Spanish CPI was above forecast but no one seems to care too much," said Kenneth Broux, head of corporate research FX and rates at Societe Generale. "CPI for France and Germany (on Wednesday) will be a better test."

Investors are watching the inflation data in case higher-than-expected figures make it harder for the European Central Bank to cut interest rates to support economic growth, particularly given the expected hit from tariffs.

Broux said growth risks now "had the upper hand" for the ECB, and the main question was whether they cut their key interest rate to 1.75% from its current 2.25% in one 50 basis point jump, or in two 25 bps moves.

Market pricing currently reflects expectations of a 25 bps cut in June, but they show an outside chance of a 50 bps move.,

ECB board member Piero Cipollone said on Tuesday that a global trade war could lower both economic growth and inflation in the euro zone and it could have an "unambiguously recessionary effect" on the countries involved. (Reporting by Alun John; editing by Andrew Heavens, Mark Heinrich and Joe Bavier)