The yield on 10-year German bonds held steady at a three-week low on Thursday, as traders awaited potential policy updates from the European Central Bank (ECB). The benchmark eurozone yield reached 2.44%, rising slightly from Wednesday's 2.408% low.
The ECB is expected to keep interest rates unchanged and may indicate a future rate cut without giving explicit guidance. A policy decision is scheduled for 1215 GMT, followed by President Christine Lagarde's news conference at 1245 GMT.
Money markets predict a 75% chance of a 25-bps rate cut in September, totaling 70 bps by 2024. The ECB's June rate cut was seen as rushed, and the bank is likely to adopt a cautious stance given high domestic inflation and wage growth.
Italy's 10-year bond yield rose 2 bps to 3.73%, as the spread with German Bunds remained stable. Germany's two-year government bond yield, more sensitive to ECB rate expectations, increased by 1.5 bps to 2.79%.
(With inputs from agencies.)
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