Euro Zone Yields Tumble as ECB Meeting Looms

Euro zone yields decreased as investors reduced expectations of European Central Bank rate hikes. This follows board member Isabel Schnabel's recent remarks. Both the Bank of England and the Bank of Japan have upcoming meetings which are drawing the market's attention.

Euro zone yields saw a decrease as investors adjusted their expectations for European Central Bank (ECB) rate hikes. This trend follows the fading impact of recent hawkish comments made by ECB board member Isabel Schnabel, ahead of the policy meeting scheduled for Thursday.

On Thursday, the Bank of England will come into focus, with the Bank of Japan slated to announce its decisions on Friday. Notably, yields on German 2-year Schatz fell 1.5 basis points to 2.123%, their lowest level since December 8.

Germany's 10-year yields, serving as a benchmark for the euro area, declined by 1.5 basis points to 2.83%, following last week's peak of 2.894%, the highest since mid-March. Money markets have adjusted their pricing, now reflecting a reduction in probability for a tightening move by December 2026 to around 20% and by March 2027 to 35%, down from more than 50% last week.

(With inputs from agencies.)