Euro Zone Bond Yields Drop Amid Anticipation of U.S. Economic Data and ECB Policy Meeting

Euro zone government bond yields fell as investors awaited U.S. economic data and the European Central Bank's policy meeting. Kamala Harris' debate performance against Donald Trump increased expectations for an interest rate decline. Germany's 10-year yield dropped to a one-month low, with market pricing indicating possible ECB rate cuts in 2024.

Government bond yields in the Euro zone saw a decline on Wednesday, as investors remained cautious ahead of U.S. economic data release and the European Central Bank's policy meeting scheduled for Thursday, which could offer insights into future rate movements.

Kamala Harris' assertive performance in the U.S. presidential debate put Donald Trump on the defensive, leading to increased expectations for a potential decline in interest rates, should Trump win.

Germany's 10-year bond yield, the key benchmark for the euro zone, dipped by 2.5 basis points to reach a new one-month low of 2.12%. Similarly, Italy's 10-year yield fell by 2.5 basis points to 3.50%. Money markets are currently pricing in around 60 basis points of ECB rate cuts in 2024, indicating two definitive moves and a 40% likelihood of a third cut.

(With inputs from agencies.)