Euro Zone Bond Yields Rise after Fed, Wait for U.S. Opening

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MILAN, June 17 Reuters Euro zone government bond yields jumped on Thursday as a Fed policy meeting was more hawkish than expected, bringing forward the first projected U.S. rates increase.

Thirteen out of 18 policymakers foresaw a liftoff in borrowing costs in 2023 instead of 2024, with 11 of them seeing two increases of 25 basis points. Seven officials see rates moving higher next year, opening the possibility of even more aggressive action.

Fed Chair Jerome Powell said there had also been initial discussions about when to pull back on the Feds bond purchases. This conversation would be completed in the coming months as the economy continues to recover.

For the remainder of the day, no fundamental impulses are scheduled that could give the market a new direction, Commerzbank analysts told clients.

When the U.S. market reopens, it should become clear if the market is still trading out of a short base, with market participants using the backup in yields to square positions, they added. More likely, however, the Fed and inflation backdrop should encourage more shorts.

Germanys 10year government bond yield, the benchmark of the bloc, rose 3 basis points to 0.16 by 0959 GMT, after briefly hitting its highest since May 25 at 0.149.

U.S. 10year Treasury borrowing costs were down 0.5 basis points in London trade.

Unicredit analysts said they felt rather comfortable with their yearend target of 2 for the 10Y U.S. yield.

They also see a steady but slower rise in Euro…

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