Sept 17 (Reuters) - Euro zone government bond yields were in a holding pattern on Wednesday ahead of a widely-expected U.S. Federal Reserve rate cut later in the day, with focus on any cues on the extent of easing the Fed may deliver this year.
Germany's 10-year bond yield , the benchmark for euro zone debt, was a touch lower at around 2.69%. French and Italian bonds traded in line with their German counterparts , , echoing muted moves in U.S. Treasury yields.
The 10-year U.S. Treasury yield was little changed at 4.02% while rate-sensitive 2-year yields hovered at around 3.51%.
Traders fully price in a 25 basis point cut by the Fed. Equally important will be commentary from Fed Chair Jerome Powell and policymakers' updated economic and interest rate projections.
A dovish surprise from the Fed could prompt U.S. Treasuries to outperform their German counterparts as investors have pared expectations of policy easing from the European Central Bank.
Money markets expect the Fed to lower policy rates by nearly 70 bps by the end of 2026 but price in a just about 50% chance of a 25 bps rate cut by the ECB by the summer of next year, according to LSEG data.
Elsewhere, data released on Wednesday showed British held at 3.8% in August, remaining the highest of any major advanced economy. The Bank of England is slated to deliver its policy decision on Thursday, alongside Norway's central bank.
While the BoE is expected to keep policy rates , the Norges Bank is expected to by 25 basis points.
(Reporting by Jaspreet Kalra; Editing by Lincoln Feast.)
((jaspreet.kalra@thomsonreuters.com [jaspreet.kalra@thomsonreuters.com]; +91-8769636545;))
