Euro Zone Bond Yields Dip Amid Trade Deal Adjustments

In a significant market movement, euro zone government bond yields fell on Friday, retreating from the recent highs reached earlier in the week. This comes as investors eagerly awaited new developments in global trade, particularly after recent optimism over easing tensions in the Sino-U.S. trade war waned.

U.S. Secretary of Commerce announced trade agreements with both the UK and China, alleviating some economic concerns that had driven demand for safe-haven assets. As a result, bond yields in the U.S. and euro zone soared to one-month highs earlier this week. However, the release of softer-than-expected economic data on Thursday highlighted a slowdown in the U.S. economy, prompting traders to anticipate potential interest rate cuts by the Federal Reserve.

Yields on key bonds adjusted accordingly, with the U.S. 10-year Treasury bond yield reducing by 4.7 basis points to 4.40% in Europe. Meanwhile, Germany's two-year bond yield, sensitive to European Central Bank rate expectations, saw a decrease of 1.8 basis points to 1.865%. Italian bond yields also fell, leading to a narrowing spread between Italian and German debt instruments.

(With inputs from agencies.)