FX.co ★ German 10-Year Bund Yield at 2-Month High

Germany's 10-year Bund yield has climbed to over 2.68%, marking its highest level in nearly two months, as market participants anticipate further clarity on the tariff rates that the United States intends to levy on imports from the European Union. The U.S. President has indicated that the European Union will soon be informed of the specific tariffs it will face, which implies that the EU's attempts to finalize a trade agreement by the August 1st deadline are not progressing well. Additionally, there is an intention to implement broad-ranging tariffs of 15% to 20% on numerous trading partners, undermining prior assumptions of a baseline rate of 10%. On the monetary policy front, the European Central Bank is widely projected to maintain interest rates this month, although markets still foresee at least one more reduction later in the year. Concurrently, Germany has unveiled its draft budget for 2025 to 2029, which includes unprecedented levels of spending and indebtedness. The government is relying on significant investment to aid in guiding the beleaguered economy back to a stable trajectory.