Yields on eurozone government bonds fell for the third consecutive trading day on Wednesday as investors adjusted their positions ahead of the Federal Reserve's rate decision and assessed the impact of rising energy prices on the inflation trajectory.
The yield on German 10-year government bonds was reported at 2.888%, down 1.3 basis points, marking the longest streak of declines in nearly a month. This yield had previously surged by about 20 basis points following a spike in energy prices due to conflicts in the Middle East.
As for short-term rates, the yield on German two-year bonds was at 2.368%, down by 1 basis point on the day, but still up by more than 30 basis points for the month.
The market expects the Federal Reserve to keep rates unchanged, but Chairman Powell's comments on the energy shock will be the focus and may influence expectations for European Central Bank policy.
Peripheral bond markets also saw declines, with Italy’s 10-year yield dropping to 3.63% and France’s 10-year yield reported at 3.528%.
