Euro Zone Bond Yields Recede Amid Anticipated Drop in German Business Sentiment

Euro zone bond yields decreased as traders anticipated a decline in German business sentiment. Germany's 10-year bond yield fell to 2.493%, following an increase due to potential U.S. tariff reductions on Chinese imports. German Ifo index expected to show decreased confidence due to trade tensions.

Euro zone government bond yields receded on Thursday, pulling back from a significant rise in the previous session. This adjustment comes as traders braced for data suggesting a downturn in German business sentiment for April.

The benchmark 10-year German bond yield eased to 2.493%, marking a retracement after Wednesday's 5.5-basis-point surge — the largest increase since early March. The rise was triggered by reports of the United States possibly cutting tariffs on Chinese imports.

With U.S. President Donald Trump's global tariffs affecting markets, easing trade tensions offer relief to investors. Nevertheless, global trade unpredictability could dent business morale, with expectations for the German Ifo index to reflect diminished confidence. Concurrently, Italy's 10-year yield decreased by 1 basis point to 3.62%, narrowing the yield spread with German bonds to 112 basis points.

Furthermore, Germany's 2-year bond yield, sensitive to European Central Bank rate forecasts, stabilized at 1.742%.

(With inputs from agencies.)