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* Nerve bond markets expect non-farm monthly jobs
* US Treasuries are preparing for the worst week in eight months
* German bond yields reach 4 and a half months highs
* ECB Draghi met Italian President this week – report
* Bond yields on the periphery of the euro area tmsnrt.rs/2ii2Bqr
By Dhara Ranasinghe
LONDON, Oct. 5 (Reuters) – Eurozone bond markets were about to have their worst week on Friday, with fears of tightening central bank monetary policy and new data on the economy. economic growth pushing borrowing costs to new heights.
Germany's benchmark 10-year government bond yields reached their highest level in four and a half months. With their counterparts in France and the Netherlands, they should experience their biggest weekly increase since at least June.
Spanish yields also reached their highest level since May, catching up with a sale that took off in the United States earlier in the week and rocked the planet.
Strong US economic data and hawkish comments by US Federal Reserve officials triggered massive sales of US Treasury bonds. The 10-year bond yields rose 15 basis points this week and are expected to see the largest weekly increase in eight months.
US nonfarm payroll data expected later Friday are heralding as the next test for concerned markets as the Fed accelerates the pace of its rate hikes.
Economists polled by Reuters predict that the US economy created 185,000 new jobs in September, compared to 201,000 in August.
In Europe, the removal of stimulus measures by the European Central Bank has increased pressure on sales. In October, monthly bond purchases were halved, reaching 15 billion euros ($ 17.26 billion).
In Germany, data released on Friday showed a recovery in industrial orders in August, up stronger than expected.
"Everything is related to central banks, (Fed Chairman, Jerome) Powell is a hawk, and do not forget that it is the first week of October when the ECB purchases have dropped and the reduction in the Fed's balance sheet has accelerated, "said Jaime Costero Denche, BBVA's strategist. .
Most 10-year bond yields in the euro area were 1 to 2 basis points higher on the day.
The yield on 10-year Spanish bonds reached its highest level since the end of May, at around 1.587%. Portuguese yields briefly touched their highest level since mid-June.
In Germany, the bloc's benchmark bond issuer, 10-year yields rose 2 basis points to 0.56%, a four and a half month high. Yields increased 8 basis points this week and are expected to have their strongest weekly jump since July.
Italian bond yields rose 3 to 6 basis points across the curve, with analysts saying the bond market was cautious about the government's budget.
Italian Deputy Prime Minister Luigi Di Maio said on Friday that he would rather defend the Italian people than to bow down to the markets he was forced to choose.
The Italian government, consisting of the Five-Star Anti-Settlement Movement and the Rightist League, is targeting a budget deficit of 2.4% of GDP next year, three times the target set by the previous government. (1 USD = 0.8690 euros)
Report by Dhara Ranasinghe, edited by Larry King
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