The yield on eurozone government bonds rose moderately, reaching a new multi-year high amid expectations of another tightening of monetary policy by world central banks.
German 10-year bond yields rose by 0.5 basis points to 2.096%. The yield on France's 10-year bonds rose by 1.4 basis points to 2.703%, while the yield on Italy's 10-year bonds increased by 9.3 basis points to 4.608%. The closely watched gap between Italian and German 10-year yields fell to 191 basis points from 265 basis points earlier today, following big moves on Monday after a rightist coalition won a clear majority in Sunday's elections.
Investors are also waiting for a number of ECB policymakers to speak, who may provide clues about the pace of interest rate hikes. UniCredit analysts note that they include two members who adhere to the "dovish" direction, and two who are considered centrists of the current monetary policy.
Market participants will also be watching the ECB's reaction to the rise in Italian bond yields after ECB President Lagarde said yesterday that the bank would not use its latest emergency scheme to buy bonds of countries that make "political mistakes."