* Government bonds from the periphery of the euro area give tmsnrt.rs/2ii2Bqr
LONDON, Sept. 16 (Reuters) – Eurozone government bond yields edged down ahead of a US Federal Reserve meeting in which market participants expect the world’s most influential policymakers remain cautious about the economy ahead of the US presidential election.
The Federal Reserve is expected to conclude its latest policy meeting on Wednesday with somewhat more optimistic economic forecasts, but a renewed commitment to keep interest rates low as long as the world’s largest economy needs to recover from its deepest recession for decades.
This should keep downward pressure on global government bond yields as the world’s largest central bank continues to benefit from the stimulus, although a further rebound is unlikely, analysts said.
“The street has assessed rate hikes through 2025, and once coupled with the fact that the Fed has already ruled out the possibility of negative interest rates, it will be difficult, if not nearly impossible, for the FOMC to over-deliver. the accommodating side tonight, ”said Stephen Innes, strategist at AxiCorp.
Eurozone bond yields declined slightly overall, with Germany’s 10-year government bond yield, the bloc’s benchmark, falling by one basis point to -0.49%.
Yields on US Treasuries were also slightly lower on the day, as 10-year borrowing costs edged down to 0.674%.
Analysts will also stay tuned for any further details on the central bank’s shift to a more flexible stance on inflation.
Charalambos Pissouros, analyst at JFD Group, said the updated economic projections would give the market a sense of how much of the inflation breach the Fed is willing to tolerate before it begins to consider raising rates.
In Europe, Germany is expected to sell 30-year Bunds in an auction at a time when demand for public debt remains strong, fueled by European Central Bank stimulus measures.
A number of ECB officials are due to speak later in the session, left by ECB chief economist Philip Lane. (Report by Abhinav Ramnarayan, editing by William Maclean)