Germany’s 10-year Bund yield stabilized at 2.6% after a volatile Monday session, hovering near its lowest level in a month, as investors sought safe havens amid uncertainty over the EU’s response to U.S. tariffs and growing fears of a global economic slowdown.
German bund yield remains close to one-month low
The European Commission revealed it had proposed a zero-for-zero tariff deal to the Trump administration in an effort to avert a trade war, but the offer was rejected. In retaliation, the EU has proposed 25% counter-tariffs on a range of U.S. goods, following President Donald Trump’s decision last month to impose levies on steel and aluminum.
The standoff has heightened tensions between two of the world’s largest trading blocs, casting a shadow over global trade prospects and dampening investor confidence. Meanwhile, market expectations for further rate cuts by the European Central Bank have increased.
Investors bet on ECB to cut rates
Traders now price in a 90% chance of a 25-basis-point cut in April, with two additional cuts expected by year-end—one potentially as soon as June, and growing speculation of a possible third. This dovish outlook reflects persistent concerns over sluggish eurozone growth, weak inflation, and geopolitical risks, all of which are contributing to the appeal of safe-haven assets like German government bonds.
