Sept 22 (Reuters) - Euro zone short-dated government bond yields hit fresh multi-year highs, and the German curve flattened after the Federal Reserve raised rates by 75 bps and flagged a steeper-than-expected tightening path at its upcoming meetings.
Germany's 2-year bond yield, which is more sensitive to rate hike expectations, rose 10 basis points (bps) to 1.859%, its highest since May 2011.
The German yield curve flattened, with the gap between 2-year and 10-year yields falling to 4.9 bps, its lowest since March 2020.
"Fed hikes by 75bp, leaves statement virtually unchanged but moves dots sharply higher, above forwards," Commerzbank analysts said in a note to clients.
The Fed's target policy rate is now at its highest level since 2008 - and new projections show it rising to the 4.25%-4.50% range by the end of this year and ending 2023 at 4.50%-4.75%. (Reporting by Stefano Rebaudo, editing by Alun John) ;))
