Euro area benchmark Bund yields set for fifth straight weekly rise

By Stefano Rebaudo

May 23 (Reuters) - Euro area benchmark Bund yields dipped on Friday but were on track for their fifth straight weekly rise, tracking moves in U.S. Treasuries as fiscal concerns dominated market sentiment.

The Republican-controlled U.S. House of Representatives on Thursday passed a sweeping tax and spending bill that could saddle the country with trillions of dollars more in debt.

Germany's 10-year yield DE10YT=RR was down 2.5 basis points (bps) at 2.62%, but still on track for a weekly rise of 3 bps, while the 30-year yields DE30YT=RR were about to end the week 8 bps higher.

U.S. Treasury yields edged down in early London trade – with the 10-year US10YT=RR falling 3 bps to 4.52% -- after dropping on Thursday as the recent selloff drew some buyers at more attractive levels. The 10-year and 30-year US30YT=RR yields were set for their biggest weekly rise since early April, when a U.S. Treasury selloff drove 10-year yields up 50 bps.

Money markets priced in the European Central Bank deposit facility rate to be at 1.72% by year-end EURESTECBM5X6=ICAP.

They also indicated more than a 95% chance of a rate cut in June and an about 20% chance of a second easing move in July. The depo rate is currently at 2.25%.

German 2-year yields DE2YT=RR, more sensitive to ECB policy rates, were down 1.5 bps at 1.81%.

Italy's 10-year yield fell 2.5 bps to 3.64% IT10YT=RR. The spread between Italian and German yields – a market gauge of the risk premium investors demand to hold Italian debt – was at 99.5 bps DE10IT10=RR.