Eurozone Yields Stabilize Amid German Political Uncertainty and Trump's Policies

Euro zone yields remained stable after reaching a weekly low due to deteriorating German investor confidence, influenced by U.S. policies under Donald Trump. Protectionist measures and political turmoil in Germany raised concerns. The ECB is considering easing measures, with Germany's fiscal policies under scrutiny ahead of possible elections.

Euro zone yields held steady on Tuesday, having earlier plunged to their lowest in over a week as a survey revealed deteriorating German investor confidence. Major concerns hover over U.S. President-elect Donald Trump's proposed policies, which investors fear could harm the European economy.

The ZEW Institute's survey reflects that investor sentiment significantly declined in November, driven by Trump's election and looming U.S. tariffs that could severely impact Europe's manufacturing sector. Germany's 10-year government bond yield, a eurozone benchmark, reached its lowest since October 30 at 2.299%, remaining largely unchanged later at 2.331%.

As the incoming U.S. administration's protectionist policies threaten global economic growth, the European Central Bank is advised to brace itself, learning from 2018. Meanwhile, German political turbulence adds to investor unease regarding public spending strategies. Current money market activities suggest a moderate ECB rate adjustment approaching the December meeting.

(With inputs from agencies.)