MILAN, July 19 Reuters Euro zone government bond yields fell on Monday ahead of Thursdays policy meeting of the European Central Bank ECB, while concerns about the Delta variant of the coronavirus continued to dampen risk sentiment.
ECB policymakers are set for a showdown as they chart a new policy path, with disagreements on the economic outlook and thus on how much more stimulus, mainly in bond purchases, is needed.
Germanys 10year bond yield was down 1 basis point, after hitting a fresh lowest since March 29 at 0.369.
The yield on the European Union bond issued in June was flat after falling to an alltime low at 0.114.
The ECB meeting takes centre stage as it looks set to be different, controversial and with tangible policy implications, Commerzbank analysts told customers.
While further sources stories could become a factor as they would probably be more skewed to the hawkish side, the potential for setbacks appears limited with surveys suggesting relatively subdued expectations for tangible changes, they added.
Deutsche Bank economists expected some changes to forward guidance and communications around the new average inflation targeting unveiled earlier this month.
The phaseout of the Pandemic Emergency Purchase Programme PEPP, which will end in March 2022, and possible changes in the Asset Purchase Programme APP were expected to hold the centre stage in the next few days and probably weeks.
ECB President Lagardes remark that the PEPP unwind may be…