Euro zone bond yields mixed before ECB meeting, US inflation data

Euro zone government bond yields were little changed on Thursday as investors stayed cautious ahead of the European Central Bank's policy decision and key U.S. economic data due later in the session.

Investors expect the ECB to hold rates steady and its President Christine Lagarde to offer limited guidance, as uncertainty over the economic impact of U.S. tariffs clouds the outlook.

U.S. inflation data may reshape market expectations for the Federal Reserve's policy trajectory, especially after last week's disappointing jobs data.


Germany's 10-year bond yield, the benchmark for the euro zone bloc, fell 0.5 basis points (bps) to 2.65%. It hit 2.80% last week, its highest level since March 26.

Markets priced in a 68% chance of a 25-bps ECB cut by June 2026 to 1.75% but also a depo rate at around 1.9% by year-end.

Germany's 2-year yields, more sensitive to expectations for ECB policy rates, rose 0.5 bps to 1.96%.

The benchmark 10-year U.S. Treasury yield rose 3 bps to 4.06% in early London trade, after falling on Wednesday.

The yield gap between safe-haven Bunds and 10-year French government bonds - a market gauge of the risk premium investors demand to hold French debt - was at 81 bps, as protests swept across France over planned spending cuts.