Anticipation Builds Ahead of Fed Chair Jerome Powell's Jackson Hole Speech

Euro zone bond yields saw a slight decrease on Friday as traders anxiously awaited Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium, seeking insights into the U.S. central bank's future monetary direction. The German 10-year bond yield, a key benchmark for the euro zone, dipped 1.2 basis points to settle at 2.74%.

In Italy, the 10-year yield decreased by 2.4 basis points to 3.59%, while the spread between Italian and German bond yields widened by 1 basis point to 85 basis points. Germany's two-year bond yield, sensitive to European Central Bank rate expectations, remained stable at 1.97%.

Powell's address, set for 10 a.m. EDT (1400 GMT), is anticipated to be crucial for traders in evaluating the likelihood of a September rate cut by the U.S. central bank. "Fed chairs have previously used Jackson Hole to signal significant policy changes," noted Christoph Rieger of Commerzbank. While expectations for a major shift are low, the door could be opened for a potential 25 basis point rate cut in September, a move with significant influence on various bond markets.

(With inputs from agencies.)