Euro Zone Yields Hover Near Historic Peaks as ECB Meeting Looms

European bond yields have been holding steady near multi-year highs as investors weigh various factors, including high energy prices and German political uncertainty. The benchmark for the euro zone, Germany's 10-year bond yield, reached a fresh 15-year high of 3.398% before dipping slightly on Tuesday.

The rate-sensitive 2-year yields were flat at 2.99%, hovering around a two-year top. Bond yields have been rising globally due to concerns about inflation and central bank rate hikes, particularly for shorter-dated yields.

Investors will get an update from the European Central Bank this week, with Thursday's meeting widely expected to raise rates. The key question is whether the ECB will provide any indications of their future plans.

Around 80% of markets expect a further rate hike by December, on top of moves this week and in June. However, Laura Cooper from Nuveen cautions that traders may have overestimated the likelihood of further tightening, saying 'pricing further tightening that is not supported by unfolding data.'