Euro zone bond yields returned to historic lows today, after the Fed displayed a dovish outlook on its monetary policy yesterday. The Fed declared that interest rates will stay lower than normal until inflation and unemployment move back to target.
Earlier this week, longer-dated euro zone bonds sold off as higher-than-expected U.S. consumer price inflation put forward the possibility the Fed may raise rates.
Italian and Spanish 10-year yields fell 7 basis points to 2.78% and 2.69% respectively. Yields on top-rated euro zone bonds were 3-4 bps lower.