Euro zone yields edge up after US shutdown, eye Treasuries for direction

By Stefano Rebaudo

Oct 1 (Reuters) - Euro zone government bond yields edged up, with investors staying on the sidelines as the U.S. government shut down most of its operations, which is expected to delay the release of key jobs data.

Germany's 10-year Bund yields, the bloc's benchmark, rose 2 basis points to 2.73%.

Tuesday's economic data from the bloc failed to trigger price action in the sovereign bond markets.

Bonds from the single currency bloc are seen to take direction from moves in U.S. Treasuries, which were up in early London trade. Benchmark 10-year yield rose 2 bps to 4.17%.

Germany's 2-year yields, more sensitive to expectations for European Central Bank policy rates, rose 1 bp to 2.03%.

Traders priced in about a 30% chance of a 25 bps ECB rate cut by July. The key rate is seen at 1.99% in February 2027, from the current 2%. The yield gap between safe-haven Bunds and 10-year French government bonds - a market gauge of the risk premium investors demand to hold French debt - was 82 bps, close to its seven-month high, after new French Prime Minister Sebastien Lecornu said he aimed for a budget deficit of around 4.7% of GDP in 2026. (reporting by Stefano Rebaudo; editing by Alex Richardson)