The German 10-year Bund yield slipped below 3.2% but stayed near Thursday’s 15-year high, as oil prices retreated following Brent’s brief move above $100 per barrel. Investors weighed the latest economic data alongside the ECB’s policy outlook.
A survey by S&P Global showed that Eurozone business activity returned to growth in July, exceeding expectations, driven in particular by a sharp rebound in German output. German manufacturing production grew at its fastest pace in almost four and a half years. However, German consumer confidence edged lower heading into August, reflecting weaker income expectations.
As widely anticipated, the ECB left interest rates unchanged at its July meeting, but signaled that a rate increase in September is becoming more likely. Rising energy prices in the context of the US-Iran conflict have heightened inflation concerns.
At the same time, the United States introduced new tariffs on imports from 60 trading partners, including the European Union. The European Commission stated that the measures are broadly in line with the existing EU–US trade agreement.
