Euro zone yields plunge, traders cut chances of ECB rate hike in April
By Stefano Rebaudo
April 8 (Reuters) - Euro zone government bond yields dropped sharply on Wednesday, after a deal for a two-week ceasefire in Iran triggered a steep fall in energy prices and prompted traders to dramatically scale back their bets on future rate hikes from the European Central Bank.
Iran's foreign minister, Abbas Araqchi, said in a statement Tehran would cease counter-attacks and provide safe passage through the Strait of Hormuz, if attacks stop.
In March, concerns for a protracted conflict stoked inflation fears, which prompted markets to price in a quick response from the European Central Bank.
Germany’s 10-year government bond yield DE10YT=RR dropped 18 basis points (bps) to 3.03% to 2.91%.
Money markets priced in a 20% chance of an ECB rate hike in April EURESTECBM1X2=ICAP from 60% on Tuesday and indicated a deposit facility rate at 2.50% by year-end EURESTECBM6X7=ICAP from 2.75%. The depo rate is currently at 2%.
