Euro zone yields steady with focus on comments from ECB policy makers

Euro zone bond yields were stable on Wednesday, as traders awaited public appearances from several European Central Bank policy makers ahead of the pre-meeting quiet period.

Executive board member Isabel Schnabel was out of the blocks early, telling a Belgian newspaper, "Given the high uncertainty about the persistence of inflation, the costs of doing too little continue to be greater than the costs of doing too much." Schnabel is often seen as one of the hawks on the rate-setting council.

The ECB has raised rates by a combined 375 basis points in the past year in the hope of taming inflation, causing a significant sell-off in government bonds. Current market expectations, which have remained largely unchanged in recent weeks, are for the ECB to raise rates by a further 50 basis points, split over its next two meetings.

Germany's 10-year bund yield, the benchmark for the euro zone, was flat at 2.37%, having largely held within a tight channel in recent weeks. The two-year yield was up 2 basis point (bps) at 2.91%.

Figures released Tuesday showed euro zone consumers have lowered their inflation expectations significantly, though policy makers are not claiming victory in their fight against inflation yet. Dutch central bank chief Klaas Knot said Tuesday underlying inflationary pressures would prove difficult to bring down, but added there were some signs monetary tightening was having an effect.

"In view of the disconnect revealed yesterday between the inflation perceptions of consumers and central bankers, today's remarks by monetary custodians will probably make very interesting reading," said analysts at DZ Bank in a morning note. Four ECB policy makers have remarks scheduled for Wednesday, before the quiet period begins ahead of the ECB meeting on June 15.

Italy's 10-year yield was 1 bp higher at 4.18% and Italy's 2-year yield was up 2 bps at 3.52%. .