Euro zone government bond yields edged up early on Monday, extending the rise of the previous week after ‍the European Central ‍Bank left monetary policy unchanged and signalled that further rate cuts were unlikely for at ​least another year.

German 10-year Bund yields ended last week around their highest since mid-March, having risen another ⁠3 basis points to bring the total this month to 20 bps, echoing the broader trend in the ⁠global fixed-income ‌market.

The 10-year Bunds, which serve as a benchmark for the wider euro zone, were up 1.6 bps at 2.91% in early trade.

Yields on the two-year Schatz, which ⁠are more reactive to changes to interest rate expectations and rose 13 bps last week, were flat at 2.161%.

Money markets currently show that traders expect euro zone rates to remain unchanged through 2026, with a roughly 50/50 chance of a first increase by around April 2027. ⁠ECB President Christine Lagarde, in her post-decision ​press conference, maintained her view that the central bank is in a good position with its monetary policy. Economists at Barclays ‍said that they believed that the likelihood of the next move being an increase was not clear-cut.

"During the press conference, ​President Lagarde made sure to preserve the ECB's optionality. She reiterated that the central bank is in a good place, but not a static place, and emphasised that all options remain on the table, implying that the next move could be a cut or a hike," they said in a note.

"Although we see the ECB on hold over the next two years and the bar for a policy change in either direction as high, we continue to see risks tilting towards lower, not higher, rates over our forecast horizon," they added.

With only two full trading days left this week ⁠for the bond market, liquidity is likely to be limited. ‌This could lead to bigger moves in yields than usual, a dynamic that tends to play out in the wider financial markets at this point in the year. European Union leaders last week ‌agreed to ⁠offer Ukraine a 90 billion euro loan over two years, leaving aside an unprecedented proposal to use frozen Russian ⁠assets to fund Kyiv's war efforts.

(Reporting by Amanda Cooper Editing by David Goodman )