Steady Euro Zone Bonds Amid Mid-East Ceasefire and ECB Move

Euro zone government bonds held a steady course on Tuesday after a ceasefire between Israel and Iran was announced by U.S. President Donald Trump, easing concerns after a 12-day conflict. However, hostilities continued as reports of casualties emerged from both nations.

Meanwhile, European investors focused on upcoming speeches by European Central Bank figures, including President Christine Lagarde and chief economist Philip Lane, who are set to further discuss economic strategies. The announcement of the ceasefire also led to a significant 10% drop in oil prices over the past week, alleviating fears of an energy price shock and its impact on economic stability amid ongoing tariffs by Trump. German 10-year yields remained largely unchanged, with a marginal increase of less than 1 basis point to 2.52%.

Germany's debt agency is poised to reveal its spending plans for the third quarter, as the government prepares to approve the draft budget for 2025 and the budget framework for 2026, featuring record investments. Despite a stagnant euro zone economy, traders anticipate a potential European Central Bank rate cut later this year as inflation edges closer to its target. Italian 10-year BTP yields saw a slight decrease.

(With inputs from agencies.)