Global Bond Sell-Off Amid Tariff Turbulence

Euro zone bonds fell due to a sell-off in U.S. Treasuries as investors opt for cash amidst tariff-related market upheavals. While German 10-year yields rose, shorter-dated yields dropped. ECB rate cut expectations intensify with U.S. tariffs and volatile trade policies impacting global markets.

Longer-dated euro zone bonds slumped on Wednesday as U.S. Treasuries fell for a third consecutive day, indicating a broader investor move away from securities traditionally seen as safe havens.

Triggered by U.S. President Donald Trump's newly imposed tariffs, including substantial duties on Chinese imports, market volatility has led to a sell-off of perceived secure assets like German Bunds and U.S. Treasuries. This shift suggests a growing preference for liquidity among investors.

In tandem with these developments, the benchmark German 10-year yield climbed by 3 basis points to 2.655%, while the U.S. 10-year Treasury yield jumped 12 basis points to 4.3762%. The yield spread between these two benchmarks expanded to approximately 175 basis points. Meanwhile, money markets are now fully factoring in a potential interest rate cut from the European Central Bank in light of tariff-induced economic slowing.

(With inputs from agencies.)