Bonds: Yields slip lower ahead of US central bank policy meeting

These were the movements in some of the most widely-followed 10-year sovereign bond yields:

US: 2.59% (-4bp)

UK: 1.22% (-2bp)
Germany: 0.45% (-3bp)
France: 1.09% (-0bp)
Spain: 1.87% (-4bp)
Italy: 2.34% (-2bp)
Portugal: 3.97% (-5bp)
Greece: 7.29% (+8bp)
Japan: 0.10% (+1bp)

Traders pushed longer-term sovereign bond yields lower ahead of the US central bank's policy announcement and the Dutch elections the next day, with the exception of those on Greek debt.

Investors were pricing in a likely 25 point basis point hike by the Fed on Wednesday to between 0.75% and 1% and were keen for signals on when the central bank’s next rate hike might arrive.

Analysts at Oxford Economics expect this week's likely hike will be the first of three 25 basis points rises this year, with the target Fed funds rate range expected to end 2017 at 1.25% to 1.5%.

Back in Europe, the Dutch Treasury sold a total of €2.28bn of five-year debt at a yield of -0.197%.

For some in the markets, the result of the auction marked a vote of confidence in the country before voters cast their ballots.

In a sign of the times perhaps, earlier in the day the ZEW institute's gauge of German economic confidence rose from a reading of 10.4 for February to 12.8 in March (consensus: 13.0).

It also continued to fall short of its long-term average of 23.9.

" A positive but below-average expectations component indicates cautious optimism for the months ahead as the future outlook remains surrounded by increased uncertainty due to upcoming political elections in major European trading partners (Netherlands, France) and Germany, as well as further policy uncertainty in the US (eg, corporate tax reform, protectionist measures) and approaching Brexit negotiations," Barclays Research said following the release.

Similarly, euro area industrial production gained 0.9% on the month in January (consensus: 1.3%).

On Greece, European Central Bank supervision chief Daniel Nouy told Greek media the situation of the country's lenders had improved substantially over the past two years and she was confident the new legal framework due to come into effect would address the bad loan problem.