German Bonds Surge Amid Tariff Tensions

On Monday, German bonds surged, driving benchmark yields to their lowest point in nearly a month. Investors sought the security of government debt in light of President Trump's impending tariff announcements. Market dynamics shifted as equities fell and bond yields dropped, signaling concerns over global trade tensions.

On Monday, German bonds saw a significant rally, taking benchmark yields to their lowest level in almost a month. This spike in demand for government debt securities came as investors reacted to looming trade tensions amid U.S. President Donald Trump's impending tariff announcement, expected on April 2.

The yield on Germany's 10-year bond, considered a benchmark for the eurozone, decreased by 7 basis points, settling at 2.659%, marking its lowest point since March 5. As bond prices rise, yields fall, exhibiting this inverse relationship. Yields on Germany's two-year bonds, influenced by expectations around European Central Bank rate policies, also fell by 5 basis points to 1.982%, reaching their nadir since mid-December.

Market players increased their bets on forthcoming ECB rate cuts, with indications that the main rate might drop to 1.84% by the end of the year. Trump's proposed reciprocal tariffs, which could affect all nations, also added to the economic uncertainty. Over the weekend, Trump indicated potential secondary tariffs on Russian oil, citing sluggish progress in Ukraine-related negotiations.

(With inputs from agencies.)