FX.co ★ Germany 10-Year Bond Yield Near 4-Week Low

Germany's 10-year Bund yield has continued its downward trend, falling below 2.7% and hitting a four-week low as global borrowing costs decrease amid a widespread shift towards safer investments. This decline comes amidst growing investor anxiety over the escalating trade war and its potential adverse effects on the global economy. This week, new retaliatory tariffs on U.S. imports, including a 25% tax on automobiles, are poised to take effect. Despite this recent decrease, the benchmark European bond yield has risen approximately 35 basis points in both March and the first quarter of the year. The yield spread between the U.S. 10-year Treasury and Germany's Bund has narrowed by about 62 basis points to around 150 basis points, marking the steepest quarterly drop since 2008, excluding pandemic disruptions. This development is largely attributed to the German parliament's approval of a substantial fiscal stimulus package aimed at bolstering economic growth. On the monetary policy side, the European Central Bank has reduced rates at five consecutive meetings, though there remains no clear consensus on its potential actions in April.