Global Tensions Spur Yield Drops and Safe Haven Rally
Germany's 10-year yield hit a six-week low amid safe haven flows due to market jitters over trade and Middle East tensions. Global yields declined after soft U.S. inflation data and a successful Treasury auction. Investors are speculating on further rate cuts despite the ECB's optimistic inflation outlook.
Germany's 10-year yield fell to a nearly six-week low on Thursday as anxious investors sought safe haven assets amid global trade tensions and unrest in the Middle East. This drop follows softer-than-expected U.S. inflation numbers released a day earlier.
The yield on Germany's benchmark 10-year Bund declined nearly 7 basis points to 2.473%, marking its lowest point since early May. The fall in yields was mirrored worldwide after data showed U.S. consumer prices rose less than anticipated in May, aided by cheaper petrol, and strong demand at a U.S. Treasury auction buoyed investor confidence.
The bond market rally continued into Thursday as a risk-off sentiment dominated, following U.S. President Trump's announcement that trade terms will soon be sent to multiple countries and the removal of U.S. personnel from the Middle East citing potential dangers. With attention now turning to upcoming U.S. producer price data, hopes are that any displayed bounceback will not be overly robust, which could derail the rising trend in U.S. Treasuries.
(With inputs from agencies.)
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