Bund yields set to end week flat after taking cues from US Treasuries

By Stefano Rebaudo

Jan 16 (Reuters) - Euro area benchmark Bund yields were set to end the week little changed, having tracked mixed movements in U.S. Treasuries through the week on ?conflicting signals about the U.S. economy.

Germany's 10-year yields were up 0.5 ?basis points (bps) at 2.82%, on track for a 0.5 ?bps weekly decline. Yields had dropped 7.3 ?bps the ?previous week for the sharpest decline since late March. The yield on ?the benchmark U.S. 10-year ?Treasury note was up one basis point at 4.16% in early London trade. It rose ?on Thursday after a ?round ?of economic data came in stronger than expected, having dipped on Wednesday on softer readings on consumer ?health and inflation.

The spread between U.S. Treasuries and Bunds was at 135 bps and set for a weekly gain of 3 bps. It hit 122.86 in mid-December, the lowest since June ?2023, ?as expectations grew that the Federal Reserve would cut interest rates further while the European Central ?Bank was forecast to hold rates steady throughout 2026.

German 30-year yields were up 1.5 bps at 3.41%.

German two-year yields, more sensitive to expectations for policy rates, were roughly unchanged at 2.11%.

Italy's 10-year government bond yields rose ?1.5 bps to 3.52%. The gap versus Bunds was at 58 bps after reaching 55 bps on Thursday for its lowest since ?August 2008.

(reporting by Stefano Rebaudo Editing by David Goodman)