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Germany’s 10-year bond yield, the benchmark for euro zone government bonds, was nearly flat at 2.701% while yields at the shorter end of the curve were also stable.
French and Italian bonds traded roughly in line with their German peers. France’s 30-year bond yield eased slightly to 4.293%, largely shrugging off Fitch’s downgrade of the country’s sovereign credit rating late last week.
With investors honing in on the outcome of the Fed meeting, the interest rate expectations-sensitive 2-year Treasury yield was steady at 3.54%.
Money markets are currently fully pricing in a 25-bps Fed rate cut this week and around 140 bps by the end of 2026, from the current range of 4.25-4.50%.
Alongside the rate decision on Wednesday, investors will also focus on policymakers’ updated summary of economic projections and commentary from Fed Chair Jerome Powell. The unprecedented pressure confronting the U.S. central bank’s independence will also be in focus during Powell’s press conference. A U.S. appeals court said on Monday President Donald Trump cannot fire Fed Governor Lisa Cook, while the Senate narrowly confirmed Trump’s top economic adviser Stephen Miran to the Fed’s Board of Governors the same day.
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