German Bond Yields Decline Amid Fed and BoE Rate Decisions

German government bond yields decreased for the sixth consecutive day, following hints of potential monetary easing by the U.S. Federal Reserve and a rate cut by the Bank of England. The yields fell as inflation pressures showed signs of easing, with the Fed and BoE making policy shifts in response.

German government bond yields have seen a continuous decline for six straight days, marking their longest stretch of decreases since November. This trend comes in the wake of potential monetary easing signals from the U.S. Federal Reserve, which could start as soon as September, and a recent interest rate cut by the Bank of England.

In a narrow vote, the British central bank decided to reduce rates from a 16-year high, reflecting divided opinions among policymakers about the sufficiency of eased inflation pressures. Fed Chair Jerome Powell highlighted broadly easing price pressures in the economy, suggesting that support for rate cuts would grow if future data aligned with expectations.

Bund yields, a key benchmark in the euro zone, dipped by one basis point to 2.29%. The euro area's borrowing costs reacted minimally to the BoE's decision. The spread between U.S. 10-year Treasuries and German Bunds increased by 2 basis points to 176 bps. Economists predict multiple Fed rate cuts starting in September, influenced by the upcoming U.S. presidential election and potential political shifts.

(With inputs from agencies.)