Shifts in Eurozone Economics: Rising Bund Yields Amid Trade Tensions

Benchmark Bund yields in the euro area rose following the ECB policy meeting, as concerns about U.S. tariffs impacting economic growth and further policy easing loom. U.S. Treasury long-term yields dropped amid concerns of an economic slowdown. Market rates show significant changes influenced by ECB policies.

European benchmark Bund yields climbed on Wednesday, reaching levels not seen since the ECB's recent policy meeting. This rise comes in anticipation of PMI data, as the European Central Bank warned of a significant economic impact from U.S. tariffs, fueling speculation of further policy easing.

Meanwhile, U.S. President Donald Trump has temporarily relented in his criticism of Federal Reserve Chair Jerome Powell, criticized for not reducing interest rates, as Treasury yields dipped on fears of an impending economic slowdown sparked by trade policies.

In money markets, changes were evident. They priced in an ECB deposit facility rate decrease to 1.57% by December, down from last week. German 10-year bond yields rose notably, while the yield spread between French and German bonds held within its typical range, indicating perceived risk levels.

(With inputs from agencies.)