FX.co ★ Germany 10-Year Bond Yield Edges Down

Amid intensifying global trade tensions, the yield on Germany’s 10-year Bund has decreased to 2.5%, marking its lowest point since early March. This decline highlights investors' inclination towards German debt, regarded as Europe's benchmark safe-haven asset. Contrastingly, interest in US Treasuries has diminished, signifying a reduction in confidence in American assets. The yield spread between US and German 10-year bonds currently stands at approximately 1.8 percentage points, the highest it has been since February. This spread was previously widened by expectations of increased fiscal spending across Europe and the outcomes of Germany’s elections, which had elevated Bund yields. In conjunction with these developments, the European Central Bank is anticipated to announce a 25 basis point interest rate cut on Thursday. Market participants will be paying close attention to any guidance from policymakers concerning the trade conflict's repercussions on the Eurozone economy and the projected trajectory for interest rates.