Euro Zone Bond Yields Rise as ECB Rate Cut Looms

Euro zone bond yields experienced an uptick on Monday as traders prepared for an expected European Central Bank rate cut later in the week, amid sensitivity to ongoing tariff news. The ECB is anticipated to lower its key rate to 2% on Thursday, marking the eighth adjustment in this cycle.

Market focus is currently on economic indicators ahead of the ECB's meeting, with euro zone inflation projected to fall to 2% by Tuesday, alongside business activity data. Meanwhile, U.S. President Donald Trump's announcement of increased tariffs on steel and aluminum has intensified trade tensions globally.

Yields on Germany's 10-year bond, the euro area's benchmark, rose by 2 bps to 2.53%, while its 30-year yield increased by 3 bps to 3.03%. Traders remain cautious about a 10-year Japanese auction following weak demand in previous auctions, with Italian and German bond yield gaps widening significantly.

(With inputs from agencies.)