Eurozone Bond Yields Fall, Diverge From U.S. Treasury Yields
1508 GMT – Eurozone bond yields trade lower in late European trade, diverging from rising U.S. Treasury yields, as investors worry about the economic toll of President Trump's tariffs and anticipate a greater number of European Central Bank interest-rate cuts. 'Overall, at the next four meetings, we expect 100 basis points of rate reductions, taking the ECB's deposit rate to a low of 1.5%,' analysts at ABN Amro say in a note. In the 10-year segment, German Bund yields lead the fall, last 6 basis points lower at 2.570%. The 10-year Italian BTP yield is an outlier, rising 1 basis points to 3.860%, according to Tradeweb. Investors meanwhile continue to sell U.S. Treasurys, with the 10-year yield up 11 basis points at 4.370%. (emese.bartha@wsj.com)
1040 ET – The rise in Treasury yields means bonds may be cheap enough to attract demand for 10-year notes being auctioned at 1 p.m., PGIM's Robert Tipp says. 'After a 50-basis-point-plus selloff in the 10-year in the last three days…I think pretty good value has been created' and the auction could go 'pretty smoothly,' he says. Fixed-income investors are worried that demand for U.S. government debt could diminish amid uncertainties stemming from trade wars. Tipp says the worst might be almost over. 'Tariff concerns were at a fever pitch and it is possible that some of this uncertainty could decline as we go forward.' (paulo.trevisani@wsj.com; @ptrevisani)
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