Euro zone yields set for weekly decline after central bank excitement

Source: Yahoo! Finance

LONDON, March 22 (Reuters) - Euro zone bond yields were heading for a weekly decline on Friday having been reassured by a string of central bank meetings this week that interest rate cuts in several markets are likely to come in the summer.

** Germany's 10 year bond yield, the euro zone benchmark, was down 2 basis points (bps), at 2.38%. it is on track for a weekly fall of 6 bps, and is trading around its lowest in a week.

** This week saw markets became more confident of rate cuts in 2024. The Federal Reserve on Wednesday kept rates steady but reiterated its projection that it will cut interest rates by 75 basis points by the end of the year, while on Thursday the Bank of England said the British economy was heading in the right direction for cuts, and the Swiss National Bank surprised markets by cutting rates.

** Markets see a roughly 80% chance that the European Central Bank and Federal Reserve will cut rates by their June meetings.

** Italy's 10 year yield was down 1 basis point on the day at 3.67% and set for a 3 bps weekly fall. The closely watched spread between German and Italian yields was at 128.3 bps, holding not far from its two-year low hit last week.

** Rate sensitive two-year yields were also set for weekly declines. Germany's two year yield was down 2 bps at 2.83% and set for a weekly drop of 7 bps, while Italy's two year yield was flat at 3.41%, on track for a weekly 5 bps fall.