Declining public debt yields in the euro area, attention

March 17 (Reuters) – Eurozone government bond yields fall on Friday as investors expect the European Central Bank to speed up monetary policy tightening only as banking crises on both sides of the Atlantic begin to fear an easing.

The ECB’s supervisory board saw no signs of spilling over to eurozone banks on Friday, with Credit Suisse and many US lenders at its centre.

The yield on two-year German government bonds – the most sensitive to interest rate changes – fell 0.5 basis points to 2.55%.

The yield on 10Y Bunds, an indicator for the block, fell by 4.5 bp. to 2.18%.

Meanwhile, interest rate hike expectations rose to 3.4% on Thursday from 3.2% – but still well below the 4.1% level recorded before fears of a banking crisis hit the market last Friday.

The yield of 10-year Italian bonds fell by 3.5 bp. to 4.12%, and the spread between the yields of 10-year Italian and German bonds amounted to 192 bp.

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(Stefan Rebaudo)