FX.co ★ German Yields Steady as Markets Await US Tariff News

German 10-year Bund yields are stabilizing around 2.6% as investors anticipate further clarity regarding upcoming U.S. trade tariffs. President Trump is anticipated to dispatch approximately twelve formal letters to trading partners today, although it remains uncertain whether EU countries will be included. Commerce Secretary Lutnick has confirmed that the broader tariff package will be postponed from July 9 to August 1, providing some short-term relief, yet leaving markets in a state of anticipation. In economic developments, Germany's industrial output exceeded expectations in May, driven by robust car manufacturing and energy output. Bundesbank President Joachim Nagel has indicated that U.S. tariffs are likely to impact Germany's economy most severely in 2025 and 2026. However, he also noted that economic growth is expected to recover from 2026, supported by government expenditure. Nagel forecasts a 0.75 percentage point increase in growth by 2027, attributed to proposed adjustments to Germany's debt brake. On the policy front, markets predict only one more ECB interest rate cut this year, as officials adopt a cautious, wait-and-see approach amidst global economic uncertainty.