Germany's 10-year Bund yield remains steady, slightly above 2.67%, marking its highest point since April 2. This stability comes as investors exercise caution regarding US-China trade negotiations and anticipate significant US data scheduled for release on Thursday, which may offer insights into the Federal Reserve's upcoming policy decisions. Despite a 90-day tariff truce between Washington and Beijing aimed at reaching a broader agreement, tariffs remain high, with the average US tariff on Chinese goods staying around 40%, an increase from the previous 20%.
In the eurozone, financial markets now predict the European Central Bank's (ECB) deposit facility rate to reach 1.79% by the end of the year, up from 1.67% last Friday. There is a 95% likelihood of a rate cut in June as policymakers strive to bolster growth amid increasing US tariffs, with an additional 10% probability of a subsequent cut in July. Supporting this dovish perspective, ECB policymaker Villeroy de Galhau mentioned the possibility of another rate cut by the summer. Meanwhile, his colleague Nagel noted there is a "good probability" that inflation will align with the central bank's 2% target.
