Euro zone government bond yields edge up before ECB policy meeting
Dec 12 (Reuters) -Euro zone government bond yields edged up on Thursday ahead of a European Central Bank policy meeting that is expected to deliver a 25 basis point rate cut and some dovish guidance.
Germany's 10-year bond yield DE10YT=RR, the benchmark for the euro zone bloc, rose 1.5 basis points (bps) to 2.15%.
Money markets fully priced in a 25 bps ECB rate cut EURESTECBM1X2=ICAP later in the session, no chance of a 50 bp move, and a deposit facility rate at 1.85% in July 2025. EURESTECBM6X7=ICAP
U.S. data on Wednesday showed core inflation rose 0.3% for a fourth consecutive month in November, indicating that progress towards the Federal Reserve's goal has stalled, analysts said.
Germany's two-year yield DE2YT=RR, more sensitive to ECB rate expectations, was up 0.5 bps at 1.97%.
Italy’s 10-year yield IT10YT=RR rose 3 bps to 3.23%, after hitting a fresh 28-month low of 3.162% the day before.
The spread between Italian and German borrowing costs DE10IT10=RR - a gauge of the risk premium investors demand to hold Italian debt - widened to 107 bps. It hit 104.50 bps earlier this week, its lowest since Oct. 2021.
The yield gap between French government bonds and safe-haven German Bunds DE10FR10=RR stalled at 76.60 bps. President Emmanuel Macron set himself 48 hours to name a new government on Tuesday.
Reporting by Stefano Rebaudo, editing by Kirsten Donovan
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