Euro Zone Bond Yields Dip Amid Global Trade Tensions

Euro zone bond yields fell on Thursday as German Bunds outperformed peers and U.S. Treasuries, amid global market risk aversion. German 10-year yields decreased to 2.50%, benefiting from tariff-related market unease. The U.S.-German yield gap widened to 182 bps, as ECB policy on tariffs and future rate cuts awaits further clarity.

Euro zone government bond yields experienced a decline on Thursday, with German Bunds outperforming their European counterparts and U.S. Treasuries. This shift came as market participants sought the safe haven offered by German Bunds amidst renewed risk aversion across various assets.

Germany's benchmark 10-year bond yield fell by 5 basis points to reach 2.50%, marking its lowest level in over a week. The recent tariff-induced market volatility has particularly favored euro zone benchmarks due to growing concerns about U.S. Treasuries. Significantly, the 10-year German yield aligns with its early March position before a major shift in German fiscal policy increased yields above 2.9%.

The U.S. 10-year Treasury remained stable at 4.32%, widening the yield gap with Germany to 182 basis points, from April's low of 140 basis points. Market sentiments were dampened by new U.S. measures restricting chip sales to China, signaling potential escalations in global trade tensions. With the European Central Bank meeting on the horizon, the financial community's focus is on tariff discussions and potential hints regarding further rate reductions.

(With inputs from agencies.)