Eurozone Bonds Rise Amid Middle East Tensions and Fed Meeting Anticipation

Euro zone government bond yields nudged higher on Tuesday, heightened by uncertainties surrounding the Middle East conflict. As tensions simmer between the U.S. and Iran, marked by the ongoing Israel-Iran air war, investors are also keenly anticipating the Federal Reserve's forthcoming policy meeting results.

U.S. President Donald Trump seeks a decisive resolution to the nuclear dispute with Iran, hinting at possible diplomatic engagements. Subsequently, German 10-year yields rose by 0.5 basis points to 2.54%, while two-year Schatz yields increased by 2 basis points to 1.86%, highlighting market trepidation.

In related economic shifts, Fed policymakers embark on a two-day meeting addressing potential commodity price upheavals. Concurrently, fresh U.S. data points towards decreased retail sales and stagnant factory output, influencing lower U.S. Treasury yields. Italian bonds lagged slightly, underperforming compared to Bunds.

(With inputs from agencies.)