LONDON (REUTERS)
Euro zone bond yields changed a little on Tuesday as the recent volatility in financial markets continued to ebb, with markets waiting for U.S. inflation data to give hints on when the Federal Reserve might ease policy.
Focus is turning to today's U.S. producer price data and tomorrow's consumer price figures, with markets on the lookout for signs that inflation is slowing enough for the Fed to lower rates next month.
Futures markets are currently evenly split on whether the central bank will lower borrowing costs by 25 or 50 basis points in September, having last week fully priced in a half-point move when concerns about the U.S. economy sent bond yields and stocks tumbling.
Germany's 10-year bond yield, the benchmark for the euro zone, was steady at 2.227%. It hit its lowest since January at 2.074% last week.
Germany's policy-sensitive two-year yield also changed slightly, at 2.394%.
Italy's 10-year yield was 0.5 basis points (bps) higher at 3.646%, keeping the yield gap between Italian and German bunds at 141 bps.