LONDON: Euro zone bond yields were broadly steady on Friday, keeping recent multi-month lows in sight given nagging concerns about the economic growth outlook as the Delta variant of the coronavirus continues to rage.
Some concern that the US Federal Reserve could be looking to taper its bond-buying stimulus as growth slows have also supported bonds in a week that has seen stock markets rattled by Fed taper and growth worries.
In early trade, Germany's 10-year Bund yield was down marginally at -0.49% -- sticking close to a six-month low hit earlier this month at -0.52%.
"The range in Bunds seems comfortable indeed," said Michael Leister, head of interest rate strategy at Commerzbank.
"Even yesterday's major risk-off in equities only briefly spilled over into Bunds with the -0.50% mark in 10-year yields once more serving as a major resistance."
Worries that growth may be peaking and expectations that the ECB would maintain a heavy dose of monetary stimulus following its recent monetary policy review pushed Bund yields in Germany, the euro zone benchmark, almost 26 basis points lower in July.
Analysts say a further deterioration in the outlook would be needed to justify a further push lower in yields from here.
Across the euro area, most 10-year bond yields were little changed to slightly lower on the day.
Italy's 10-year bond yield was down 1.5 bps at 0.55% , also not far off roughly six-month lows hit earlier in August.
There was on increasing focus on shifting German election polls as a September 26 national election draws closer.
Latest polls show Germany's centre-left Social Democrats (SPD) have overtaken the Greens and are now closing the gap with Chancellor Angela Merkel's conservatives.
"It seems unlikely that a coalition of two parties can form a government and thus, for the first time, a three-party coalition will probably have to be formed," analysts at RBC Capital Markets said in a note.
"This implies that it is likely one of the more traditional alliances will have to be broken. The question is which one?"