Bond Yields Edge Up as Investors Eye Major Central Bank Decisions

Euro zone government bond yields experienced a slight increase on Tuesday as investors shifted their attention to forthcoming policy meetings by the Federal Reserve and the Bank of Japan. In addition, significant economic data releases from the U.S. and the euro area are anticipated shortly.

Borrowing costs decreased on Monday as markets deferred expectations for a 25-basis-point rate cut to March 2026. Economists have cautioned that investors might be overestimating the European Central Bank's recent hawkish stance. Sovereign bonds had a subdued response to the trade deal between the U.S. and the European Union.

Germany's 10-year government bond yield, considered the benchmark for the euro area, saw a small rise to 2.69%. The money markets currently factor in a 64% probability of an ECB rate cut by December. Meanwhile, the monetary policy stance of global central banks continues to hold significant sway over bond market trajectories.

(With inputs from agencies.)