Euro zone 10-year yields near three-month lows at start of busy week

Euro zone bond yields started the week around their lowest since early March as the recent plunge in the price of oil to close to $70 a barrel has eased inflation worries, welcome news for central bankers about to gather at the ‌ECB's Sintra ⁠Forum.

European ⁠Central Bank President Christine Lagarde opens the forum on Monday evening, and the most closely watched panel will be on Wednesday, featuring new Federal Reserve chair Kevin Warsh as well as Lagarde and Bank of England Governor Andrew Bailey.

Investors will be watching closely for any hints ⁠about how the ‌central bankers assess the state of the economy and how they see policy developing in the ⁠coming weeks and months.


Markets have scaled back their bets on the scale of the interest rate increase they expect from the ECB and Bank of England since the interim ceasefire between Iran and the U.S., which reopened the Strait of Hormuz. That sent oil lower and, with that, inflation expectations.

Those expectations ‌will be tested this week with inflation data for June due from Germany and France on Tuesday and the euro zone ⁠on Wednesday.

Ahead of that, Germany's 10-year bond yield was around 1 basis point higher at 2.86% in early trading on Monday. The euro zone benchmark dropped as low as 2.83% last Friday, its lowest since March 10.

Germany's rate-sensitive two-year yield was up 2 bps at 2.53%, but also still near a two-month low hit on Friday.