LONDON: Euro zone government bond yields drifted lower on Monday, with Germany's benchmark Bund yield briefly touching a one-month low as investors positioned for a run of potentially market-moving data and events this week.
ECB chief Mario Draghi is scheduled to speak in the European Union parliament later in the day, new Federal Reserve head Jerome Powell delivers his semi-annual testimony to Congress starting on Tuesday, and a flash estimate of euro zone inflation data for February is due on Wednesday.
On Sunday, Italians vote in a national election expected to result in a hung parliament, the same day results are due of a ballot of Social Democrat party members on a coalition deal that could seal or end German Chancellor Angela Merkel's hopes of a fourth term in office.
For now, investors were just biding their time with bond yields extending recent falls, analysts said.
Peripheral bond yields, which came under some selling pressure last week from pre-election jitters in Italy, were down 3-4 basis points on the day .
"The euro zone growth story outweighs the political story in Italy at the moment," said Rabobank fixed income strategist Matt Cairns.
Germany's benchmark 10-year Bund yield touched a one-month low at 0.64 percent before steadying at around 0.66 percent -- still 15 bps below a more than two-year high hit earlier this month.
Government bond markets across the world have recovered some ground in the past week after a recent sharp sell-off on jitters that strong economic growth and signs of a pick-up in inflation will encourage central banks to press ahead with reversing ultra-loose monetary policies.
German 10-year bond yields are set to end February down around 4 basis points, their biggest monthly fall since October.
Analysts said they did not expect ECB chief Draghi to say anything new during his appearance on Monday although there would be some focus on his comments as investors try to assess just how quickly the ECB will wind up its massive stimulus scheme, which is scheduled to run until the end of September.
"It has been flagged that QE (quantitative easing) will end around year-end," said Rainer Guntermann, a rates strategist at Commerzbank.
"I wouldn't be surprised if Draghi and other ECB members stress that rates will stay low for longer, which should be supportive for bond markets."
On Friday, ECB executive board member Benoit Coeure said the bank has bought enough bonds so that it could retreat from further purchases without risking an unwarranted rise in longer-dated bond yields.
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