Euro zone bond yields dropped on Tuesday, resuming a fall that began last week after major central banks pushed back against market expectations for tighter monetary policy. The German 10-year yield had its biggest weekly drop since 2012 last week and other euro zone government bond yields hit multi-week lows, as investors reduced their bets on future interest rate hikes following dovish moves by the Federal Reserve and the Bank of England. While this move paused on Monday, it continued on Tuesday, with yields down around 3 to 8 basis points (bps). Germany’s 10-year yield hit its lowest since Sept. 23 at -0.287%, while the 30-year yield was down 8 bps at 0.032% at 1550 GMT, its lowest since late August. Italy’s 10-year bond yield hit a 26-day low of 0.847% . The Italian 30-year yield hit its lowest since Sept. 23 at 1.683%. Germany’s 10-year inflation-linked bond, which reflects the so-called real yields, fell to a record low of -2.09% . Antoine Bouvet, senior rates strategist at ING, said the pushback by central banks against aggressive pricing in of rate hikes helped explain the move lower in real bond yields. “Developed market central banks threw away an opportunity to prove they’re not behind the curve, so demand for inflation hedges rises as a result,” he said. “Whether inflation fears will prove justified or not is besides the point. In the near term, investors have no reason to doubt inflation risk is rising.” On Monday, European Central Bank chief economist Philip Lane said that tightening monetary policy to temper the current bout of inflation in the euro zone would be counterproductive. But top ECB supervisor Andrea Enria said on Tuesday that low ECB interest rates were now hurting bank margins. Investor sentiment in Germany rose unexpectedly in November on expectations that price pressures will ease at the start of next year and growth will pick up in Europe’s largest economy, the ZEW economic sentiment index showed. (Reporting by Elizabeth Howcroft, additional reporting by Dhara Ranasinghe; Editing by Alex Richardson and Andrei Khalip)