Two-month low for Eurozone two-year bond yields as Fed remains dovish

Two-year government bond yields in the Eurozone fell to their lowest in around two months on Thursday, and longer-dated yields also dropped after a sharp fall in US Treasury yields as markets took a dovish message from a Federal Reserve meeting.

Germany's two-year yield dropped to as low as 3.01 percent in early trading, down around 3 basis points to its lowest since Sept 5.

Italy's two-year yield touched 3.749 percent, its lowest in almost two months.

The Federal Reserve on Wednesday left policy rates steady and acknowledged that the recent increase in yields has had a tightening impact on financial conditions, underscoring market expectations the US central bank is at the end of its monetary tightening campaign.

That caused sharp moves lower in U.S. Treasury yields, with the two-year Treasury yield dropping as low as 4.925 percent on Thursday, its lowest in over three weeks, and a whisker off its lowest in two months.

Germany's 10-year bond yields on Thursday meanwhile fell to a three week low of 2.71 percent.