Eurozone Bonds Hold Steady Amid CPI Anticipation

Eurozone bond markets remained stable as traders anticipated U.S. CPI data and the upcoming European Central Bank meeting. Germany's bond yields showed minimal change, aligning with Italian bonds. The market speculates a potential rate cut by ECB, influencing bond yield movements inversely with their prices.

Eurozone bonds remained steady on Wednesday as the financial market awaited crucial U.S. CPI data and eyed the European Central Bank's upcoming meeting. Germany's benchmark 10-year bond yield saw little movement at 2.12%, reflecting the eurozone's cautiously patient stance.

Traders are keenly aware that the U.S. CPI inflation data, expected at 1330 GMT, could sway investor expectations concerning a potential Federal Reserve rate cut next week. Italy's 10-year yield stayed stable at 3.20%, with the yield gap between Italian and German bonds firmly at 108 basis points.

As bond yields inversely relate to prices, Thursday's ECB meeting might see a 25-basis-point rate reduction, as investors have fully factored this into market pricing. Germany's two-year bond yield dropped modestly by 1 basis point to 1.96%, sensitive to the ECB's potential rate actions.

(With inputs from agencies.)