Turbulent Week for Euro Zone Bonds Amid U.S.-China Trade Tensions

Euro zone bond yields remained steady despite a volatile week, influenced by global economic concerns and U.S.-China trade tensions. A significant rise in the gap between U.S. and German bond yields highlights investor anxiety. German inflation saw a slight decrease, confirming earlier data.

Euro zone bond yields held firm on Friday following a week of intense market instability, driven by fears over the global economy and escalating U.S.-China trade tensions. Despite a temporary break in some of President Donald Trump's broader tariffs, investor anxiety fuelled a significant selloff of U.S. bonds and the dollar.

The German 10-year bond yield, a key benchmark, saw a marginal increase of 0.7 basis points to 2.59%. Meanwhile, the dramatic rise in U.S. yields led to a wider gap with German 10-year yields, highlighting further market agitation.

This renewal of selling pressure in U.S. bonds on Friday pushed the 10-year note yield up to 4.427%, expanding the spread versus German Bunds to 182 bps—its largest weekly jump in decades. Elsewhere, Italian bond yields rose, and German inflation slightly eased to 2.3% in March, underscoring ongoing economic uncertainties.

(With inputs from agencies.)