European bond yields slip ahead of second day of US-China trade talks
The European Central Bank has projected inflation to reach 1.6% next year. (Reuters pic)
FRANKFURT : Euro zone government bond yields were little changed today, continuing the previous day's stability, as markets eyed a second day of trade talks between the US and China.
Traders will also focus on a host of European Central Bank (ECB) officials speaking this week after the central bank cut interest rates last week by 25 basis points to 2%, as expected, but signalled it may be closer to the end of its easing cycle than many had expected.
Germany's 10-year yield, the benchmark for the euro zone, was down 3 basis points at 2.542%.
Two-year German yields also fell 3 bps to 1.846%, while 30-year yields were down at 3.008%.
Ten-year Italian yields slipped 2 bps to 3.482%, leaving the gap between German and Italian yields at 91.90.
ECB officials speaking this week include board member Isabel Schnabel, with comments from policymakers Peter Kazimir and Robert Holzmann yesterday supporting the view that an end to rate cuts may be approaching.
Elsewhere, Japan's super-long government bond prices rose today, after Reuters reported the government is considering buying back some super-long-dated bonds in a move to contain rising yields.
Investors will also be looking for any impact from tariffs in inflation data out of the US this week.
'Although the outlook for the euro zone is currently much more favourable, the Bund future was brought back down to Earth (last week) by a surprisingly hawkish ECB press conference and robust US labour market figures,' analysts at Frankfurt-based Metzler wrote in a note to clients.
'Given that the ECB itself expects inflation to reach 1.6% next year, we anticipate some downside potential at both the short and long ends of the yield curve for the time being,' analysts added.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Sun
18 hours ago
- The Sun
US tariff uncertainty hits Spain GDP forecast
MADRID: Uncertainty from US President Donald Trump's tariffs, and the risk they bring a global slowdown, forced Spain's central bank on Tuesday to downgrade its 2025 economic growth forecast. It predicted Spain's economy would grow 2.4 percent this year, down from a previous forecast of 2.7 percent. The Bank of Spain said a 'small slowdown in the pace of GDP growth' was expected over the second half of 2025. It also lowered its 2026 forecast from 1.9 percent to 1.8 percent. The recalculations were due to 'heightened uncertainty' for the world economy, the bank said. Markets 'remain very vulnerable to possible negative disruptions that could arrive in coming weeks', it said, noting that dipping confidence would likely have 'a negative impact on consumption'. While the Bank of Spain said that negotiations the United States was holding with major trading partners held out hope of 'de-escalation', it did not rule out 'an intensification of the trade war'. Spain is part of the eurozone. In its own forecasts given at the end of last year -- before Trump took office and subsequently announced the higher US tariffs -- the European Commission forecast 2.6 percent growth for Spain this year.
Free Malaysia Today
21 hours ago
- Free Malaysia Today
European bond yields slip ahead of second day of US-China trade talks
The European Central Bank has projected inflation to reach 1.6% next year. (Reuters pic) FRANKFURT : Euro zone government bond yields were little changed today, continuing the previous day's stability, as markets eyed a second day of trade talks between the US and China. Traders will also focus on a host of European Central Bank (ECB) officials speaking this week after the central bank cut interest rates last week by 25 basis points to 2%, as expected, but signalled it may be closer to the end of its easing cycle than many had expected. Germany's 10-year yield, the benchmark for the euro zone, was down 3 basis points at 2.542%. Two-year German yields also fell 3 bps to 1.846%, while 30-year yields were down at 3.008%. Ten-year Italian yields slipped 2 bps to 3.482%, leaving the gap between German and Italian yields at 91.90. ECB officials speaking this week include board member Isabel Schnabel, with comments from policymakers Peter Kazimir and Robert Holzmann yesterday supporting the view that an end to rate cuts may be approaching. Elsewhere, Japan's super-long government bond prices rose today, after Reuters reported the government is considering buying back some super-long-dated bonds in a move to contain rising yields. Investors will also be looking for any impact from tariffs in inflation data out of the US this week. 'Although the outlook for the euro zone is currently much more favourable, the Bund future was brought back down to Earth (last week) by a surprisingly hawkish ECB press conference and robust US labour market figures,' analysts at Frankfurt-based Metzler wrote in a note to clients. 'Given that the ECB itself expects inflation to reach 1.6% next year, we anticipate some downside potential at both the short and long ends of the yield curve for the time being,' analysts added.
BusinessToday
a day ago
- BusinessToday
Fitch Downgrades APAC Tech Sector Outlook To 'Deteriorating'
Fitch Ratings has revised its 2025 outlook for the Asia-Pacific (APAC) technology sector from 'neutral' to 'deteriorating', signaling increased downside risks primarily driven by the escalating global tariff environment. The ratings agency warns that tariffs are expected to directly hurt demand for hardware and trigger wider economic slowdowns due to reduced consumer confidence and spending globally. According to Fitch, the APAC tech sector is particularly vulnerable given its central role as the world's primary assembly hub for technology hardware and the dominant manufacturer of critical component parts across the supply chain. Consumer technology hardware, often a discretionary purchase, is highly susceptible to shifts in consumer confidence and spending habits. Fitch anticipates the United States will present a challenging market for consumer technology products this year, following its earlier revision of the US retail and consumer products sectors' outlooks to 'deteriorating' in April 2025. While some companies exposed to discretionary categories have already faced negative rating actions, most Fitch-rated US retailers and consumer product companies are believed to possess sufficient rating headroom to withstand current volatility. Beyond the US, APAC technology hardware businesses are also facing tough conditions in other major markets. Fitch forecasts weak consumer spending growth in 2025 for the eurozone (1%), Japan (0.7%), and the UK (0.9%). Although China's consumer spending growth forecast for 2025 remains relatively robust at 3.3%, this is still a downward revision from the 4.3% projected in December 2024. Within Fitch's rated portfolio, APAC technology hardware companies are generally expected to fare better than their non-rated peers due to their larger size, greater diversification, and enhanced financial flexibility. However, Renesas (BBB/Stable) and LG Electronics (BBB/Stable) have been identified as having the lowest rating headroom within this group. Divergent Trends Within Semiconductors and Internet Segments: The outlook for different segments within the APAC semiconductor sector continues to diverge. Fitch anticipates strong demand related to Artificial Intelligence (AI) will persist, but warns that non-AI demand will be weak, particularly due to the likely tariff-related fall-off in demand for consumer electronics. The semiconductor industry also faces ongoing supply chain challenges that could impact production timelines and cost structures throughout 2025. For the Chinese internet sub-segment, Fitch maintains a 'neutral' outlook for 2025. The agency expects major internet companies' strong business profiles, robust margins, and substantial net cash positions to support their credit profiles. However, their performance may diverge further due to an uneven impact from weak consumer spending, intense competition, and the increased deployment of AI across internet services. Lastly, the outlook for the Indian IT services sub-segment remains 'neutral'. While revenue growth is expected to be affected by the slowdown in global economic growth driven by tariff uncertainty and more cautious customer spending on external IT services, Fitch still forecasts positive revenue and EBITDA growth for the segment. Related
