Euro zone bond yields little changed ahead of Fed's Powell speech

Euro zone bonds were little changed on Friday as traders braced for a speech by Federal Reserve Chair Jerome Powell at the Jackson Hole symposium for clues on the U.S. central bank's monetary path.

The German 10-year bond yield, the benchmark for the euro zone bloc, flattened at 2.75%.

Italy's 10-year yield was higher by 0.7 basis points at 3.62%, and the gap between Italian and German bunds widened 0.8 bps to 84.9 bps.


Germany's two-year bond yield, which is more sensitive to European Central Bank rate expectations, held steady at 1.97%.

Powell's speech, expected at 10 a.m. EDT (1400 GMT), will be key as traders assess the chances of a September rate cut by the U.S. central bank.

Changes in Fed rate expectations often influence other bond markets given the scale of the U.S. economy, the world's largest.

Money markets currently see a 70% chance of a 25-bps rate cut at the Fed's next session in September. Earlier this week, they saw a 85% chance for such a cut.

The drop in Fed cut expectations pushed Treasury yields higher on Thursday.