Euro zone yields dip before inflation data, central bank meetings
July 29 (Reuters) -Euro zone yields edged down on Monday in a week packed with crucial economic events, including euro area inflation data, and policy meetings at the Federal Reserve, the Bank of England and the Bank of Japan.
Germany’s 10-year government bond yield DE10YT=RR, the euro area’s benchmark, dropped 0.5 basis points (bps) to 2.40%.
Money markets fully priced in two European Central Bank 25-bp rate cuts and a 10% chance of an additional move by year-end, in line with levels seen late Friday. EURESTECBM3X4=ICAP
Italy's 10-year yield IT10YT=RR was down one bp at 3.75%.
The yield gap between Italian and German 10-year bonds DE10IT10=RR - a gauge of the risk premium investors demand to hold Italian debt – was at 135 bps.
The spread between French and German government bond yields DE10FR10=RR was at 69.80 bps, not far from its highest level after the French vote of around 72 bps.
Germany's two-year bond yield DE2YT=RR, which is more sensitive to policy rate expectations, was flat at 2.67%.
Editing by Bernadette Baum
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