German Bond Yields Surge Amid U.S. Fiscal Concerns and Tepid Treasury Demand
German long-term bond yields reached their highest in two months as investor concerns over the fiscal outlook in the U.S. grew. Tepid demand for a U.S. Treasury auction further fueled these concerns. Upcoming sector surveys in the euro zone, Britain, and the U.S. add to the uncertainty.
German bond yields surged to a two-month peak on Thursday, reflecting heightened investor anxiety over deteriorating fiscal conditions in the United States. Tepid demand for a recent U.S. Treasury auction added fuel to the fire, causing German 30-year bond yields to briefly touch a new multimonth high.
Investor attention has now shifted to incoming manufacturing and services surveys from the euro zone, the United States, and Britain, anticipated later in the day. However, the broader economic concerns have kept euro zone bond yields relatively elevated, with particular weakness noted in longer-term German bonds.
U.S. fiscal pressures, agitated by legislative developments like President Donald Trump's tax bill, are raising borrowing costs. This, coupled with Moody's recent credit rating downgrade, has stabilized yields on 30-year Treasury bonds above 5%. Business activity figures expected from the euro zone and Germany provide a key area of focus moving forward.
(With inputs from agencies.)
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