Bond Yields Rise Amid Tariff Uncertainty

Euro zone government bond yields rose as investors remained cautious about U.S. tariff policies under President Trump. Amidst this, Germany's bond yield increased while market focus turned to upcoming central bank meetings. The uncertainty held investors back from making significant moves.

Euro zone government bond yields experienced an upward trend on Thursday, marked by investor caution fueled by uncertainty surrounding U.S. President Donald Trump's tariff policies. As international markets awaited clearer signals from Trump's administration, anticipation built leading into central bank meetings scheduled for next week.

Trump refrained from immediately imposing tariffs on U.S. imports as investors had speculated, but he suggested potential 25% tariffs on Canada and Mexico, and approximately 10% tariffs on Chinese imports starting February 1. This announcement has kept the market in a tentative position, reflected in the slight increase in Germany's 10-year bond yield by less than one basis point throughout the week.

In the midst of these developments, Germany's 10-year Bund yields rose by around 2 basis points to 2.52% on Thursday. Bond yields tend to rise inversely to price declines. Meanwhile, the European Central Bank is anticipated to reduce interest rates by 25 basis points next week, while the U.S. Federal Reserve is expected to maintain current rates.

(With inputs from agencies.)