Euro zone bond yields hold after Bessent fuels speculation over large Fed cut

LONDON, Aug 14 (Reuters) - Euro zone bond yields were steady on Thursday having fallen the day before as investors priced in more easing from the U.S. Federal Reserve after Treasury Secretary Scott Bessent called on the central bank to opt for a large interest rate cut.

In an interview on Bloomberg TV, U.S. President Donald Trump's influential right-hand man on the economy said there was "a good chance" the Fed lowers interest rates by 50 basis points when it meets next month.

Investors moved to fully price in a rate cut from the Fed in September, with around a 7% chance of a larger 50 bp move. Money market futures imply about a 50% chance that the European Central Bank lowers borrowing costs again by the year's end.

The size and importance of the U.S. economy means expectations about Fed rate cuts often heavily influence other markets.

Germany's two-year yield DE2YT=RR, which is sensitive to changes in monetary policy expectations, was flat at 1.937%. It fell 3.5 bps on Wednesday, its biggest daily drop since August 1.

Germany's 10-year yield DE10YT=RR, the benchmark for the euro area, was down 0.5 bps at 2.674% after falling 6.5 bps on Wednesday.

Investors were now awaiting U.S. factory inflation and jobless claims data due later on Thursday as well as the Alaska summit between Trump and Russian President Vladimir Putin on Friday.

Analysts have said a ceasefire in Ukraine could support riskier assets and weigh on government bond prices, lifting yields.

Germany's 30-year yield DE30YT=RR, which touched an 11-year high of 3.309% on Tuesday, was down 0.5 bps at 3.227%.