Euro Zone Bond Yields Steady Ahead of Fed Decision

Euro zone bond yields remained steady with investors cautious before the Federal Reserve's rate decision, expected to cause significant market reaction. Germany's 10-year bond yield stayed at 2.15% as global rate cuts progress. The market predicts a 60% chance for a 50 basis points cut.

Euro zone bond yields held steady on Wednesday with investors cautious ahead of the long-awaited Federal Reserve rate decision later in the day, expected to generate a significant market reaction. Germany's 10-year bond yield, the benchmark for the euro zone bloc, remained unchanged at 2.15%, continuing a trend of decrease in recent months as global central banks' rate cuts gather pace.

Investors are anxiously awaiting the Federal Reserve meeting, the outcome of which will be announced at 2 p.m. EDT (1800 GMT). The Fed is widely expected to start its rate-cutting cycle, but it remains unclear whether it will be by 25 or 50 basis points. Current market sentiment suggests a 60% chance for a 50 bp move.

Jim Reid, global head of macro research at Deutsche Bank, highlighted the uncertainty surrounding this decision, which is reminiscent of events over 15 years ago. "A lot of money will be made and lost today," he noted.

Italy's 10-year yield inched up by 1 bp to 3.51%, and the spread between Italian and German bunds widened slightly to 136 bps. Germany's two-year bond yield, more sensitive to European Central Bank rate expectations, remained flat at 2.23%.

(With inputs from agencies.)