European bond yields steady as metals rout grips markets

By Sophie Kiderlin

LONDON, 2 Feb (Reuters) - Safe-haven euro zone government bond yields were steady on Monday as a rout in precious metals gripped markets at the start of a week that will also see an ?interest rate decision from the European Central Bank. Silver and gold extended last week's ?declines, sliding around 10% and 6%, respectively, prompting investors to ?sell other assets like stocks to cover ?losses.

CME Group raised ?margin requirements on various futures contracts, including on gold and silver, which ?contributed to the sharp selloff in ?metals that began at the tail-end of last week after U.S. President Donald Trump nominated Kevin ?Warsh to be the next ?Federal Reserve ?Chair.

However government bonds, which are generally regarded as safe-haven assets, appeared largely unscathed. German 10-year yields, the euro zone's ?benchmark, were last steady at 2.8428%, while two-year yields, which are more sensitive to rate expectations, were stable at 2.068%.

Investors also looked to the ECB's meeting later this week. While the central bank is widely expected to ?keep ?interest rates unchanged, markets will be watching closely for signs as to how the euro's recent strength could ?affect policy-making going forward. Concerns that a stronger euro could amplify deflationary pressures and prompt the ECB to cut interest rates further emerged last week, pushing German two-year yields to their biggest monthly drop since April 2025. Before the central bank meeting, inflation data for various ?euro zone economies, and the bloc itself, is expected. Data out of Germany on Friday showed inflation in Europe's largest economy picked up slightly in ?January.

(Reporting by Sophie Kiderlin, editing by Amanda Cooper and Sharon Singleton)