German ultra-long-dated yields were heading for their steepest weekly ‍increase in ‍nearly two months on Friday on expectations of ​continued bond supply pressure, with investors awaiting PMI figures later in ⁠the session. 

Economists expect the euro area to increase fiscal spending after ⁠Germany unveiled ‌landmark investment plans, while geopolitical tensions are also prompting greater defence outlays across the single-currency bloc.

Germany’s ⁠10-year government bond yield, the euro area’s benchmark, was flat at 2.88%.

The 30-year yield was 0.5 basis points lower at 3.49%, and set for a weekly ⁠rise of 7 bps, ​the biggest since early December.

Meanwhile, hawkish signals from the Bank of Japan on ‍Friday lifted short-term government bond yields to a three-decade high, while 30-year ​borrowing costs fell 3 bps to 3.64% after hitting an all-time high at 3.68% earlier this week.

The gap between 30-year and 10-year German bond yields was at 60 bps, and set to end the week 3.5 bps higher, the biggest widening since mid-November.

German 2-year yields, more sensitive to expectations for policy rates, were flat at 2.11% and ⁠on track to end the week roughly ‌unchanged.

Italy’s 10-year government bond yields dropped 0.5 bps to 3.51%. The gap versus Bunds was at 59 ‌bps, after tightening ⁠to 53.50 last Friday, its lowest level since August 2008.

(Reporting ⁠by Stefano Rebaudo; Editing by Joe Bavier)