Euro zone government bond yields dropped and markets increased their bets on future European Central Bank rate cuts on Thursday as the tariff announcement by US President Donald Trump increased fears of a trade war which would hurt global growth.
Money markets priced in an 80% chance of a 25 basis points (bps) ECB rate cut in April, and a depo rate at 1.82% in December from around 1.9%.
Trump on Wednesday unveiled sweeping global tariffs of at least 10% on goods imported from most US trading partners.
Euro zone bond yields dip as traders look to ECB decision
The benchmark German 10-year yield dropped nearly 8 basis points to 2.648% its lowest since early March.
Germany’s 2-year yield, which is more sensitive to ECB policy rates, fell 8.5 bps to 1.958%, its lowest since December 12.
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