Euro zone short-dated yields jump as fears of banking crisis fade

March 22 (Reuters) – Euro zone government bond yields rose on Wednesday as fears of a banking crisis receded and ECB hawks called for more rate hikes.

Markets are awaiting the outcome of the Federal Reserve’s Federal Open Market Committee (FOMC) at 1800 GMT.

Eurozone policy-setters must be “stubborn” and continue increasing borrowing costs to battle inflation, Bundesbank chief Joachim Nagel said.

US Treasury Secretary Janet Yellen told bankers on Tuesday that she is prepared to intervene to protect depositors in smaller U.S. banks suffering deposit runs.

Germany’s 2-year government bond yield, the most sensitive to changes in expectations for interest rates, rose as much as 13.1 bps and was last up 12 basis points (bps) at 2.7%.

(Reporting by Stefano Rebaudo; Editing by Amanda Cooper)