Bond Yields in Europe Fall

Germany’s 10-year Bund yield fell to 2.65%, the lowest point in roughly a month, following President Trump’s recent tariff declaration. This move has triggered a notable shift towards safe-haven assets and intensified concerns about its repercussions on the global economy. The United States plans to enforce a 10% tariff on all imports, with specific nations facing considerably higher rates. The European Union, in particular, will encounter tariffs reaching up to 20%, causing European Commission President Ursula von der Leyen to caution that these actions pose a significant threat to the global economy. She also announced that the EU is readying its own countermeasures. With over 20% of EU exports directed to the US, Germany stands among the countries most likely to be impacted. Market traders are now factoring in nearly an 80% likelihood of a 25 basis point reduction in the ECB’s rate by April. Projections for the deposit rate have been adjusted downward to 1.82% by December, from earlier forecasts of 1.9% and the current rate of 2.5%. Bond yields in France and Italy have also dipped to 3.4% and 3.8%, respectively.

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