Eurozone Markets React to ECB Easing and Trade Tensions

Investors adjust to potential ECB easing amid U.S. trade tensions and weak economic indicators. Inflation and employment figures underline eurozone struggles, with Italy and Germany facing particular challenges. Political developments in France could further impact market dynamics.

Money markets placed increased bets on the European Central Bank's easing measures. Short-dated yields dropped to pre-spending package levels in Germany, as focus shifted from economic data to U.S. tariffs.

March inflation fell below forecasts in major eurozone economies, and consumer expectations for price growth remained low. A rate cut from the ECB in April seemed more probable, affecting German 2-year yields sensitive to policy rates.

Germany's unemployment rose sharply, mirroring Europe's broader economic struggles. Italian morale dipped due to geopolitical tensions and U.S. tariffs. Meanwhile, political pressures in France could affect the economy if Marine Le Pen is barred from the 2027 presidential race.

(With inputs from agencies.)