Euro Zone Bond Yields Surge Amid EU-US Trade Deal Speculation
Euro zone bond yields increased as markets anticipated a potential trade deal between the EU and the U.S., avoiding a harsher tariff. Germany's yield, a key benchmark, saw significant rise. The ECB maintained interest rates steady, awaiting clarity on EU-U.S. trade relations, influencing market dynamics.
In a boost to market sentiment, euro zone bond yields rose sharply on Thursday, driven by expectations of a potential trade agreement between the European Union and the United States that could avert steeper tariffs. Notably, Germany's 10-year yield, a key euro zone benchmark, surged 8.5 basis points to 2.686%, indicating the largest single-day rise since May.
The European Central Bank, aligning with market forecasts, decided to keep its interest rates unchanged while monitoring developments in EU-U.S. trade discussions. This move comes amid optimistic market sentiment spurred by reports hinting at a 15% tariff arrangement on EU exports to the U.S., contrasting the impending 30% levy.
Investor confidence was further boosted by an acceleration in euro zone business activity, primarily driven by the services sector's resurgence and manufacturing recovery. The positive economic indicators, alongside trade deal hopes, led to reduced expectations of near-term ECB interest rate cuts, shifting market priorities towards international trade dynamics.
(With inputs from agencies.)
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