Euro zone government bond yields struggle for direction ahead of US data

The euro zone benchmark hit a three-week high of 2.457% on Monday. Money markets priced in 85 bps of European Central Bank rate cuts in 2024, compared with 81 bps early on Tuesday and 91 bps on Thursday, tracking similar moves in the U.S. market. Italy's 10-year yield, the benchmark for the euro zone periphery, was down 0.5 bps at 3.71%.

Euro zone government bond yields struggled for direction on Wednesday after tracking U.S. Treasuries earlier this week as investors await U.S. inflation data, which might shape the Federal Reserve's monetary policy path. Germany's 10-year yield was down 0.5 basis points (bps) at 2.36%. The euro zone benchmark hit a three-week high of 2.457% on Monday.

Money markets priced in 85 bps of European Central Bank rate cuts in 2024, compared with 81 bps early on Tuesday and 91 bps on Thursday, tracking similar moves in the U.S. market. The ECB will meet on Thursday and is widely expected to keep rates unchanged while the market will focus on any hints from President Christine Lagarde about future moves.

The U.S. benchmark 10-year Treasury yield < US10YT=RR> was flat at 4.364%, after reaching 4.464% on Monday, its highest since late November. Italy's 10-year yield, the benchmark for the euro zone periphery, was down 0.5 bps at 3.71%.

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