Euro Zone Bond Yields Steady Amid ECB Rate Speculations

Euro zone government bond yields remained stable as investors anticipated an interest rate cut by the European Central Bank. France faced fiscal and political challenges with a negative outlook from Fitch. Italian yields fell slightly, as investors focused on upcoming ECB decisions.

Government bond yields across the euro zone showed little movement on Monday, following last week's increase, as investors set their sights on an anticipated interest rate cut by the European Central Bank this Thursday. Germany's 10-year bond yield, serving as the euro zone's benchmark, remained unchanged at 2.27%.

French 10-year yields mirrored the broader market's stability despite Fitch revising France's economic outlook to 'negative' from 'stable,' due to rising fiscal and political risks. The recent French budget plan proposed significant spending cuts and tax hikes to address the growing fiscal deficit, amid political fragmentation and minority governance challenges.

With U.S. bond markets closed and limited economic data, investor attention is on the ECB meeting, where a rate cut of 25 basis points to 3.25% is expected. Market players are eager for ECB signals of further rate reductions, though Berenberg's chief economist anticipates no major announcements altering December predictions.

(With inputs from agencies.)