FX.co ★ Bund Yields Tick Higher as ECB Holds Rates

Germany's 10-year Bund yield rose slightly to 2.68% following the European Central Bank's decision to maintain current interest rates, halting a series of eight consecutive cuts over the past year. This decision reflects a prudent wait-and-see approach, amid ongoing trade negotiations between the European Union and the Trump administration, with a significant deadline on August 1 looming. Although the immediate trade uncertainty casts a shadow over the economic outlook, there is a potential for medium-term support through anticipated increases in public investment. Reports suggest that the EU and the US are on the verge of agreeing on a deal that would levy 15% tariffs on certain European imports while removing duties on others. In money markets, traders are fully anticipating a 25-basis-point rate cut by December, with around a 50% chance of it happening as early as September. On the economic data front, German consumer sentiment experienced an unexpected decline as August approached. Meanwhile, preliminary PMI data revealed only slight growth in business activity for July, a deceleration from June that did not meet expectations.