Euro zone yields edge down before central bank decisions, US data

Euro zone government bond yields slipped on Monday as investors braced for a week packed with central bank policy meetings and Tuesday's U.S. jobs data that may shape the Federal Reserve's policy outlook. The European Central Bank and the Bank of England will hold their meetings on Thursday while the Bank of Japan will announce its decision on Friday.

Euro zone government bond yields slipped on Monday as investors braced for a week packed with central bank policy meetings and Tuesday's U.S. jobs data that may shape the Federal Reserve's policy outlook.

The European Central Bank and the Bank of England will hold their meetings on Thursday while the Bank of Japan will announce its decision on Friday. Germany's 10-year yield, the euro area benchmark, was down 1.5 basis points (bps) at 2.85%. It hit 2.894% last week, the highest level since mid-March.

Money markets have priced out an ECB rate cut in 2026, while assigning around a 25% probability to a tightening move by December 2026 and an about 50% chance by March 2027. The ECB deposit rate is currently at 2%. German 30-year yields were down 2.5 bps to 3.46%. They reached 3.498% on Friday, the highest level since July 2011, as long-dated debt came under pressure on expectations for heavier bond supply.

Demand for ultra-long debt is set to shrink as Dutch pension funds, a key buyer, will no longer need to hold large amounts of these assets after an industry reform. Benchmark 10-year U.S. Treasury yields fell 3 bps to 4.17% in early London trade after rising 5.5 bps on Friday as investors assessed commentary from a flurry of Fed speakers and a positive outlook on the economy. The yield on the German 2-year Schatz was flat at 2.16%.

Italy's 10-year yields fell 2 bps to 3.54%.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)