Euro Zone Bond Yields Ease as Investors Brace for Macro Data

Euro zone bond yields eased for a second day on Tuesday as investors considered the potential impact of a Donald Trump victory in the U.S. presidential election. Key economic indicators, including Germany's ZEW index and ECB's lending survey, could influence market sentiment. The ECB meeting on Thursday is expected to maintain current monetary policy.

Euro zone government bond yields eased for a second day on Tuesday, as investors considered the implications of a potential Donald Trump victory in the U.S. presidential election for financial markets. Analysts suggest that Germany's ZEW index of economic expectations and the European Central Bank's lending survey could set the tone.

Thursday's ECB meeting is not expected to yield changes in monetary policy. Rate strategist Hauke Siemssen from Commerzbank noted, 'With macro pointers likely to come in rather subdued, we expect 10-year Bund yields to remain below the 2.5% mark and suggest buying dips.'

German 10-year yields, the euro zone benchmark, declined by 1.4 basis points to 2.46%, while two-year German yields remained flat at 2.793%. Italian 10-year yields dipped by 1.7 basis points to 3.73%, widening the premium over Bunds by 5.5 basis points to 127.1. The spread between U.S. 10-year Treasuries and German Bunds remained mostly unchanged at 174 basis points.

On Monday, the spread saw its largest daily rise since late June due to concerns about U.S. government finances under a Trump-led administration.

(With inputs from agencies.)