Euro zone government bonds held ground in early Tuesday trade, as caution set in before a U.S. Federal Reserve meeting and uncertainty around vaccinations in the bloc supported safehaven assets.
Wednesdays Fed meeting is in focus amid expectations that economic growth and inflation will rebound after U.S. fiscal stimulus, which has pushed up government bond yields across the world in recent weeks. The Fed so far has been downplaying those concerns.
Safehaven euro zone government bonds were also supported by concerns around the blocs vaccination efforts which already lag the U.S. and Britain after Europes largest economies temporarily halted the use of AstraZenecas vaccine on Monday
The vaccine currently encompasses around 25 of the vaccines distributed across the European Union, and 15 of those so far administered, according to Mizuho analysts.
Uncertainty around the AstraZeneca vaccine rollout adds to the general theme that the Eurozone is lagging behind in the recovery from the pandemic, ING analysts told clients.
On Tuesday, Germanys 10year yield, the benchmark for the euro area, was unchanged at 0.34 at 0829 GMT, below the highest since March 2020 around 0.20 touched in late February. Bond yields move inversely with prices.
The gap between 10year German and U.S. Treasury yields an indicator that reflects the divergence between safehaven assets in the euro area and the United States remains just shy of its highest since February 2020, as U.S. yields have…