Euro Zone Bond Yields Steady Amid Economic Reassessment

Euro zone government bond yields remained stable as traders evaluated economic prospects following the European Central Bank's recent rate decision. Both the U.S. tariffs' potential impact on growth and President Trump's Fed rate cut demand influenced bond markets, affecting German and Italian yields and widening U.S.-German yield spreads.

Euro zone government bond yields held steady on Tuesday as financial markets reopened after the long Easter weekend. Investors were carefully assessing the broader economic landscape in light of the European Central Bank's rate decision slated for Thursday and fresh concerns over U.S. tariffs dampening economic growth.

In the United States, President Donald Trump on Monday fueled market reactions by urging the Federal Reserve to cut interest rates immediately, warning of potential domestic growth slowdowns. This sparked a sell-off in long-dated U.S. Treasuries. Following this, German 10-year bond yields slightly increased to 2.47%, while Italy's 10-year yield also rose to 3.66%.

Trump continued his verbal assault on Fed Chair Jerome Powell, who maintains that rate cuts should wait until the impact of Trump's tariffs on inflation is clear. Meanwhile, the yield spread between U.S. Treasuries and German Bunds widened significantly. Germany's two-year bond yield continued its decline, influenced by expectations for further ECB rate cuts following the recent rate decrease to 2.25%.

(With inputs from agencies.)