Euro Zone Bonds Rise Amid Tariff Tensions and Bond Sale Forecasts

Euro zone bond yields increased on Friday as traders awaited President Trump's tariff decision regarding the EU after imposing a 35% duty on Canada. Concerns over EU economic impacts and potential for European government debt rise amidst spending pledges are swaying markets. German yields are seeing notable increases.

Euro zone bond yields climbed on Friday, with market participants keenly anticipating U.S. President Donald Trump's verdict on imposing tariffs against the European Union. This increased activity follows his unexpected 35% duty on Canada, a move stirring global trade concerns.

Evelyne Gomez-Liechti, a strategist at Mizuho International, noted that the euro zone's bond yield shifts indicated increased attention due to the U.S. curve's overnight steepening. German two-year yields rose 1.5 basis points to 1.906%, while their 10-year Bund counterparts edged up by 2.6 basis points to 2.69%.

The impending EU tariffs have injected uncertainty, affecting risk assets unfavorably, with European equities dropping 1.1% by 1444 GMT. Despite worries about heightened debt stemming from EU's spending on defense and infrastructure, analysts point to possible impacts on longer-term bonds. Meanwhile, German 30-year Bund yields reached new highs since March, amplified by Dutch pension fund sales.

(With inputs from agencies.)