0951 GMT – U.S. Treasury yields decline across the yield curve in European midday trade amid an apparent de-escalation of the tariff issues. “While trade tensions between the U.S. and China have persisted, recent remarks by [Treasury Secretary] Scott Bessent and Donald Trump could mark a significant turning point,” say analysts at Natixis in a note. Bessent highlighted the need for greater collaboration with institutions such as the International Monetary Fund and World Bank to ease these tensions and also said that the trade war with China is not sustainable. The 10-year Treasury yield falls 3 basis points to 3.830%; the 10-year yield is down 4 basis points at 4.347%; while the 30-year yield drops 3 basis points to 4.799%, according to Tradeweb. (
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Core European Bonds Look Attractive Despite Short-Term Volatility
0913 GMT – Core European government bond markets look attractive based on expectations that the European Central Bank will cut interest rates further, says Candriam’s Nadege Dufosse in a note. Candriam’s long position in German Bunds remains a cornerstone allocation despite short-term volatility, the global head of asset allocation says. “With inflation trending lower and the European Central Bank expected to ease monetary policy further, Bunds and other core sovereigns remain in focus,” she says. Candriam remains cautious on U.S. Treasurys as concerns about growth outweigh rate-cut expectations. (
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German 10-Year Bund Yield Edges Higher on Above-Forecast Ifo Data
0816 GMT – German 10-year Bund yields edge marginally higher on better-than-expected Ifo economic sentiment data for April. The 10-year Bund yield trades 2 basis points lower at 2.487% after the data, versus 2.482% beforehand, according to Tradeweb. The Ifo index came in at 86.9 in April, above the consensus forecast of 85.1 in The Wall Street Journal’s poll. (
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Markets Want to Move on From Tariffs
0632 GMT – Markets are starting to turn the page on tariffs, with risk-on sentiment taking its toll on Bunds, says Commerzbank Research’s Hauke Siemssen in a note. The upcoming release of German Ifo business climate index is unlikely to reignite growth fears, he says. Analysts in The Wall Street Journal’s poll forecast business expectations and sentiment to weaken in April compared to March, although they forecast that current conditions will remain unchanged. Nevertheless, in early trade, the 10-year Bund yield edges lower, tracking a decline in U.S. Treasury yields. The 10-year Bund yield is down 1 bp to 2.498%, while the 10-year Treasury yield falls 3 bps to 4.358%, according to Tradeweb. (
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Bond Markets Show Unusual Characteristics These Days
0604 GMT – There are so many unusual bond market characteristics these days, and one of them is a major divergence in the moves of front-end and long-end rates in the U.S., says MFS Investment Management’s Benoit Anne in a note. Two-year Treasury yields have fallen 8 bps while the 10-year Treasury yields have increased 22 bps since end-March, says the senior managing director. “That sort of correlation breakdown is not common,” he says. “The last time that the correlation was so low between the two-year and the 10-year yields was back in 2022, under a substantially different monetary policy regime,” he says. At the time, front-end rates were running the show, reflecting the hawkish signals from the Federal Reserve, he says. (
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Patience Needed to See Japanese Investor Appetite for U.S. Treasurys in April
0604 GMT – Market participants need to wait to see how Japanese investors’ appetite for U.S. Treasurys has been in April, says Danske Bank Research’s Joel Rossier in a note. The U.S. Treasury’s five-year note auction on Wednesday showed decent demand from foreign investors, the senior analyst says. A report on the allotment at Treasury auctions during April show more or less unchanged appetite from foreign investors, he says. “Hence, we must wait until June before we get data for e.g, Japanese net buying of Treasuries in April.” (
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