Euro zone bonds steady but expected to remain supported

Euro zone bond yields were broadly stable on Friday with the asset class expected to remain supported given uncertainty around coronavirus cases and geopolitical headlines into the weekend.

Euro zone bond yields were broadly stable on Friday with the asset class expected to remain supported given uncertainty around coronavirus cases and geopolitical headlines into the weekend. The governor of Texas paused the state's reopening as COVID-19 infections and hospitalizations surged and the United States set a new record for a one-day increase in cases .

The country's senate also passed legislation to impose sanctions on people or companies that back Chinese efforts to restrict Hong Kong's autonomy, another potential flashpoint in trade tensions. "With markets probably cautious ahead of a headline-prone weekend the Bund bid looks set to extend," Commerzbank analysts said in a client note.

Mizuho analysts said developments around the virus over the weekend and more talk of trade-tensions heightened the risk of important events happening outside market hours. That tends to make investors more cautious going into the weekend. With a fairly light calendar for data releases, business confidence data and money supply data from the European Central Bank may attract some attention.

Italian consumer confidence data is due at 0900 GMT, after the French reading exceeded a Reuters poll estimate. The ECB is due to release its annual growth rate for M3, a broader indicator of money circulating in the economy, at 0800 GMT. A key focus will be the net flows from Italian banks into Italian government bonds, according to UniCredit analysts.

Germany's 10-year benchmark yield was unchanged at -0.47% , close to one-month lows hit on Thursday at -0.48%. Italy's 10-year yield was down 2 basis points at 1.35% after a sell-off that pushed it as much as 6 basis points higher a day earlier.

Italy will sell five and seven-year bonds in the third quarter, targeting an overall issuance amount of at least 10 billion euros for each one of them, as well as a zero-coupon 2022 bond for at least 9 billion euros, its Treasury said on Thursday.

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